Shares in FTSE 100 gambling provider GVC Holdings PLC (LON:GVC) slipped in mid-morning trading Monday after its subsidiary, bookmaker Ladbrokes, found itself caught up in a scandal regarding payoffs to victims of a problem gambler.
According to a report from The Guardian on Monday, Ladbrokes had agreed to pay the victims of the problem gambler, who had stolen money from clients of their Dubai-based property business to feed their gambling habit, £1mln in return for a pledge to not inform the industry regulator.
The gambler later admitted to having stolen the funds, with Ladbrokes agreeing to pay the money to five of the victims who accused the bookmaker of accepting stolen funds.
However, The Guardian said it had seen the settlement agreement which had included a demand by Ladbrokes that the victims “agree not to bring any complaint or make any report to any regulator in relation to the claim” in order to receive the money.
The paper also revealed that it had been passed text messages and photos that revealed the company had offered the gambling addict generous incentives, including free tickets to Arsenal games, the company box at the Royal Ascot, and return flights from Dubai.
Incentives are a common practice in the industry to ensure the loyalty of high-paying customers.
The issue came to light when the gambler reported the issue to the Gambling Commission, breaking the terms of the settlement.
An area of particular concern were text messages exchanged between the gambler and an account manager assigned to him, which raised doubts around the company’s compliance with regulations designed to prevent problem gambling and money laundering.
The GC, which monitors the industry, said it was investigating the matter to “ascertain the full circumstances” of the revelations.
The case follows incidents among several gambling firms where the regulator has extracted millions in fines due to failures to spot gambling addiction and money laundering among its clients.
One example is FTSE 250 bookmaker William Hill plc (LON:WMH), which was fined £6.2mln in February after the GC said it had failed to spot obvious signs of problem gambling and had therefore breached anti-money laundering and social responsibility regulations.
GVC shares were down 3.7% at 694.5p.