Ladbrokes Coral Group PLC (LON:LCL) has been fined £2.3mln for failing to interact with two customers who gambled away £1.3mln of stolen money.
The Gambling Commission said the betting company’s subsidiary, Gala Interactive, breached rules aimed at protecting vulnerable customers.
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In an investigation of Gala, the Commission found “significant flaws” in its dealings with two customers who later went to prison for using stolen money to fund their gambling addiction.
One customer lost £837,545 over 14 months playing Gala's online games, while the other lost £432,765 over 11 months, the Commission said.
One of the customers was sent to prison for four years for stealing from an employer. The other received a four-and-a-half year prison sentence for acquiring, using or possessing criminal property.
The Commission said Gala had not put in place procedures and written policies to curb problem gambling.
Ladbrokes Coral chief executive Jim Mullens said: "In the two cases reviewed with the commission, it was clear that within our operations, we had not met our own standards or those demanded by the commission.”
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The penalty includes a £1mln payment to fund research into the cause of problem gambling and a £1.3mln compensation for victims of the two customers.
Gala has also volunteered to pay a further £200,000 towards research.
The Gambling Commission's chief executive, Sarah Harrison, said: "We will continue to take robust action where we see operator failures that harm consumers and the wider public.
"It is the responsibility of all operators - particularly key decision makers in those companies - to ensure they are protecting their customers and step in when there is behaviour that might indicate problem gambling.”