Videoslots, an international online casino operator owned by Immense Holdings, has come into regulatory trouble in the UK for the second time in just under three years.

The company has been charged £650,000 by the UK Gambling Commission (UKGC) for failing to fully adhere to anti-money laundering and social responsibility licensing requirements.

As well as the penalty, the company will have to undergo a third party audit to ensure it is effectively implementing policies, procedures and controls around AML and safer gambling – areas that the UKGC is extremely focused on at the moment.

The Commission has expressed its intent to rigorously enforce compliance with UK gambling regulations among both B2C and B2B firms. This comes amid the ongoing adoption of Gambling Act review recommendations, with the White Paper from the two-and-a-half year review published back in 2023, as well as a very politically heated debate around betting taxation.

John Pierce, Commission Director of Enforcement, said: “Operators are required to have effective Social Responsibility and Anti-Money Laundering policies, procedures and controls as a condition of holding an operating licence.

“In this case, the operator’s monthly deposit limits were found to be ineffective when tested in practice and AML controls were not applied to the standards we expect. The investigation identified a serious example where pre-paid digital vouchers had been used for gambling without effective oversight and early intervention.

“The over-reliance on an algorithm to monitor risk meant that the customer was able to carry out a high volume of deposits and transfer the proceeds of gambling to multiple different destination accounts with insufficient and timely checks or robust source of funds verification taking place.”

Videoslots’ rocky regulatory relations

In Videoslots case, the firm – which runs three domains in the UK, videoslots.co.uk, mrvegas.com and megariches.com – was found to use a monitoring system using a monthly deposit limit running across an entire calendar month, not including the customer’s initial deposit.

An assessment of its AML and counter-terrorist financing (CTF) standards also found gaps in policy and procedure, an over-reliance on an algorithm to identify and monitor customer behaviour, and omissions in record management.

Specific examples highlighted by the Commission included a customer losing £5,000 despite having a £3,000 deposit limit and a customer who lost $6,550 over the course of three active days of gambling during a two-month period receiving no interactions from Videoslots.

The Commission’s enforcement action comes two-and-a-half years after Videoslots was hit with a similar penalty from the regulator. The firm paid £2m back in June 2023, after the Commission found flaws in its AML policies between October 2019-February 2022.

“Open-loop payment systems are high risk in nature because they could enable anonymous deposits and make it harder to trace funds,” Pierce remarked.

“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.

“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.”

Videoslots have also come into murky regulatory waters in other jurisdictions. In December last year the firm was charged SEK 4m (£288,000) by the Swedish regulator, Spelinspektionen, also for failure to meet AML licence requirements.