UKGC Under Fire for Hidden Agreements, Lack of Transparency May Impact Crypto-iGaming

The UK Gambling Commission has been secretly negotiating deals with betting firms, including surrendering revenues for failings that are not published publicly.

First reported in the Observer, the Commission has applied “special measures” to specific firms. The special measures are suggested to allow companies in breach to “implement an action plan” and “divest any profits” generated from regulatory failures.

Anti-gambling lobbyists suggest that the UKGC has thrown a “protective bubble” around firms that may put gambling regulators at harm.

UKGC’s Lack of Transparency and Its Impact on Crypto Gambling

The UKGC’s failings also pose challenges for the crypto gambling industry, which seeks to gain wider acceptance and introduce stablecoins as an authorized payment method.

Crypto-assets are currently classified as having a higher risk by the UK’s regulator. The Commission explicitly highlights issues surrounding regulatory adherence regarding the source of funds, fluctuations when compared to fiat value, the impact of volatility on AML law and deposit limits), scalability, cost, and the security of funds held.

UKGC’s Special Measures Policy: A Shield for Betting Firms?

The UK Gambling Commission’s ‘special measures’ rule, introduced in 2020, allows the UKGC and its licensees to avoid public scrutiny if the measures are implemented because the breach does not pose a risk to the public.

The lack of transparency was highlighted when last week, Annie Ashton filed a legal claim at the high court. Her husband Luke took his life after suffering from gambling addiction, and an inquest heard that Flutter-owned Betfair failed to undertake adequate identification of customers who were at risk of gambling harm. Betfair was in special measures at the time of her husband’s death, yet this was only disclosed by the UKGC after the inquest had concluded.

Ashton called for the regulator to publish the number of firms it has put into special measures, the names of each firm, and the revenues surrendered. The UKGC refused to provide the Observer with figures from the last three years.

It has previously refused a freedom of information request, claiming it could “jeopardize the willingness of companies to provide information on a voluntary basis.”

The Commission’s website outlines: “The exact risks depend on how the business model is implemented and the type of crypto-asset. We must be satisfied that any licensee considering accepting such payment methods has considered and implemented steps to reduce any risk to the licensing objectives to the same level that we would expect from other payment methods.”

The cryptocurrency ecosystem could help alleviate the opaque nature of regulatory interventions. Given that all transactions are recorded with blockchain-based gambling, transparency would be increased. Currently, with a lack of understanding and regulation, players could instead be at greater risk of harm.