Gambling and Crime

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Crime and Gambling are activities which have several characteristics in common, the most obvious being that people choosing to engage in either (or both) do so by risking losing something that is of value to them in order to have the chance of gaining something of even greater value. Those who are gambling risk losing money, while those who engage in criminality risk losing their freedom. With such a commonality of principle driving the decision to engage in either activity it is hardly surprising that there is a lot of crossover between the two.

There is a widespread and common perception amongst the general population that Crime and Gambling are interlinked. To some extent there is an element of historical circumstance contributing to this as for many years gambling was not permitted as a legitimate business activity and was thus considered the preserve of illegal crime syndicates - similar in many ways to alcohol production and sales in the USA during the Prohibition years. But while alcohol, as a business sector, has successfully shed all such unsavoury connotations, the gambling industry has not. The UK Gambling Commission's annually run telephone surveys on gambling participation and perception has shown that over the past seven years the number of respondents agreeing that gambling is associated with criminal activity has steadily climbed and, as at December 2022, now sits at 41% in agreement that there is such an association. 

While the survey does not ask respondents why they think there may be such an association there are two obvious areas where the general public may be directly influenced - through seeing news articles about individuals being convicted of financial crimes to feed gambling disorders, or from having personal experience of someone they know misappropriating funds to gamble with. While newspaper reports of someone stealing large sums of money (> £100k) to feed a gambling addiction are now common place it remains sadly true that the vast majority of financial crimes linked to gambling fall well below the threshold for reporting (either by press or to authorities) and are most likely to occur within family and household trust circles.

Perhaps the two most commonly perceived types of crime related to gambling are Money Laundering - criminals using gambling industry to 'legitimise' criminal proceeds - and people stealing money to gamble with. While the first of these has been associated with gambling activity more or less since gambling was first legalised, the second of these is a relatively recent arrival on to the radar of public awareness. This has been partly due to the rapid expansion and availability of online gambling which has helped facilitate the gambling of very large sums of 'virtual' money through bank and credit card deposits, and an awareness of increasing numbers of high profile, high value employee fraud cases linked to (mostly) online gambling by individuals suffering from Gambling Disorders. 

These are, of course, not the only crimes being committed with association to gambling. Match fixing, whether on a local Sunday League level or involving elite level sports, is still very common, helped to a great extent by the sheer number of in-play markets made available to sports bettors allowing events not affecting the overall result outcome (spot-markets) to be manipulated for profit. Cricket, tennis, snooker and football have all been the subjects of recent proven criminal attempts to commit fraud.

While crimes involving a financial element have most obvious relevance for gambling harms there are many non-financial crimes committed due to the presence of gambling harms - these can include vandalism (smashing up gaming machines in casinos/bookmakers), anti-social behaviours, and violence - especially in domestic settings.

There are also several 'grey' areas of legality - somewhat comparable to the financial market equivalents of insider trading - where stakeholders can seek to turn reserved knowledge into wagered profit. In horse racing parlance this is known as 'landing a touch'. The use of such 'informed' knowledge may, or may not, technically constitute a crime depending on who is using this knowledge but may breach employment policies.

For instance, it is usually not permitted for most professional sports people to bet on their own sport,  or even, in some cases, on any sport. It is, however, not illegal to take advantage of personal knowledge about the private form or health of a competitor if that information was not obtained through the person's direct role in a 'reserved' position of employment - e.g. as a doctor, vet, or coach. 

Similarly, sports where handicapping is involved can also present opportunities for dubious practices to flourish that may fall just outside the realm of deliberate or unlawful cheating. Entering juvenile horses into races which do not suit the profile strengths of those horses (code, distance, surface type, course layout, etc) can result in poor performance ratings and thus the setting of handicap marks which under represent the true ability of the animal when matched to conditions which do suit. Some big name horse trainers have almost made a career out of careful placement. This raises questions as to whether this should be viewed as 'unfair manipulation' or simply 'good management' by the stables involved.  

Stretching the boundaries of what constitutes a crime when it involves sports (and sports betting) we can encounter many contentious areas of behaviour. For example, was Barney Curley a genius or a fraud? Or how about Maradona and Thierry Henry? While few would go as far as suggesting that on-pitch misdemeanours such as deliberate hand ball were criminal offences 'per se', the actions of that particular pair of players at large international competitions had undeniable financial consequences for global betting markets. And what about cases of on-pitch behaviour which do meet criteria for potential criminalisation - should Harald Schumacher have been charged with aggravated assault back in 1982? 

It would easy to assume that all crimes committed that have a link to gambling are done so just by customers - i.e. gamblers. Effective Money Laundering is practically a prerequisite of running serious organised crime organisations, such as drug cartels, which generate large cash values. It is not surprising that many casinos and bookmaking firms were historically bought or created by criminal enterprises seeking to establish a legitimate and legal front to their less public operations - there is good reason as to why Las Vegas was also known as Sin City. While the advent of an official GB Regulator (Gambling Commission) and the requirement for stricter licencing and personal integrity requirements will have gone some way to 'cleaning up' the industry it is inconceivable to think that licenced gambling operations would not be seen by some modern day criminals as still offering a very lucrative investment opportunity and a continued means for the recycling of unlawfully sourced funds. 

Over the past few years the advent of widespread online betting has also lead to the advent of large value frauds committed by individuals suffering from Gambling Disorders. Gambling with criminal proceeds is of course not a new phenomenon. Street level drug dealers have long relied upon the availability of neighbourhood bookie shops to furnish them with 'winning' ticket receipts to give legal credence to their possession of large sums of cash should they be stopped and searched by the police. Bookmakers, regardless of any protestations to the contrary, have always known that this goes on and have effectively turned a blind eye to it. Partly because they do not consider it their place to openly accuse individuals of being criminals, and partly because it is generally quite profitable to them to do so. It is also something that has plausible deniability for the Operator as the cash based nature of most High Street based gambling transactions is anonymous and hard to trace. 

Hard, but not impossible. Nor, indeed, as plausibly deniable as some Operators might want it to be. The 2021 Civil Law case of Dhir v Flutter (owners of Paddy Power) heard evidence that one particular customer of their High Street outlets was permitted to lodge £127,000 in bank notes over the counter in a period spanning just eight weeks. This level and nature of deposit failed to cause any AML suspicions to be raised officially by the shop staff despite it being an extraordinary sum of money to be presented under any conceivable circumstances. This money was later found to have been unlawfully obtained by the individual placing, and gambling it. If a case as obviously questionable, in terms of potential Money Laundering risk, as was presented here managed to escape AML compliance checking then one would have to ask if this was the exception or the norm? If such sums of money had been presented at a High Street Bank, or even at an Antiques shop, then accepting it without reporting AML concerns would have been a breach of legal responsibility - so why was it considered acceptable for a High Street bookmaker not to have to comply with similar obligations. Even if this case was taken to represent an extreme 'outlier', in statistical terms, for the depositing of cash at High Street bookmakers, it raises significant questions as to just how much illegal money is being allowed to be laundered through such shops, possibly with the tacit acceptance of the Operators.

Which brings us back to the surge in high-profile, high-value, and well publicised fraud cases linked to Online Gambling. While cash, particularly when deposited in small transaction based amounts, may be hard to link to an overall pattern of gambling by any one individual that cannot be said to be true of online gambling accounts. The T&Cs routinely applied by Operators mean that in order to gamble online a customer must register a user account and do so as an individual rather than as a cartel. While there are some facilities allowing cash to be deposited to online betting accounts the overwhelming majority of deposits made are done so using traceable electronic fund deposits - e.g. direct from bank accounts via inter-account transfers, BACS, CHAPS or debit/credit card deposits. All of which are theoretically 'traceable' and 'verifiable'. If a customer has deposited and gambled using an online account the Operator has absolute oversight of all their transactional activities including total deposits, withdrawals, bets placed, win rates, loss rates, frequency of betting, duration of sessions, failed attempts at depositing funds, reversal of withdrawals, and so on. They also have full oversight of their own interactions and contacts with the customer including requests for proof of source of funding, welfare checks, bonuses and promotions offered and accepted. 

In other words the Operators have full access to every piece of data needed to ensure that full AML compliance and Responsible Gambling Codes of Practice are adhered to. So why is it that news reports of individuals stealing hundreds of thousands and even millions of pounds then gambling it all away online are becoming almost weekly occurrences. The answer is because while the Operators can indeed use all their data analytics to identify individuals who represent high risks of potential criminal involvement the same analytics will, for the majority of these cases, also be reporting that the customer is engaging in severely disordered gambling which if left unchecked will continue to provide enhanced rates of GGY - i.e. Operator profit. Given the 'moral and ethical' choice between stopping further involvement with the customer until verified proof of affordability and lawful source of wealth is established, and the alternative approach of allowing the petrol meter to keep clicking over, some Operators do seem to deliberately choose to delay intervening until either the criminality is exposed by other means or the sheer scale of funds being passed to them makes it untenable to keep ignoring the dereliction of duty to LCCP and AML requirements in the face of regulatory inspection.

By operating in such a manner the less scrupulous Operators are actively and knowingly breaching both the LCCP conditions placed upon them, as licence holders, by the regulator, and more significantly also breaching the Money Laundering 2007 regulations - thus actively engaging in wanton criminal activity at a corporate level. So why do they do this and risk criminalisation? Sadly the answer is because up until now they have been allowed to get away with doing so and they are aware that unless the regulatory landscape currently existing in Great Britain changes then they will continue to get away with it as they are being protected by the official regulator from corporate prosecution on criminal charges. 

The Gambling Commission has a reserved power to prosecute any crimes involving gambling within the jurisdictions of England and Wales. As such, when crimes involving fraud and stealing money to feed Gambling Disorders and addictions are uncovered the Crown Prosecution Service will not ordinarily consider taking action against licenced gambling operators. Instead they will limit their involvement to the prosecution of the crimes committed by the disordered gambler and leave it to the Gambling Commission to investigate whether the actions of Operators also potentially constituted criminal behaviour. Although having the power to investigate Operators and to raise criminal proceedings against them if they find merit in doing so lies fully with the Gambling Commission it has so far been the policy of the Gambling Commission NOT to raise criminal prosecution for such activities, even where blatant and knowing breaches of criminal law have taken place. Instead the Gambling Commission by default limit their acts of censure to carrying out regulatory rather than criminal investigations and to taking only regulatory rather than criminal actions where AML breaches have been found to occur. Even then the usual outcome is that the regulator reaches voluntary agreement with the operator to pay a mutually agreed financial settlement rather than be on receipt of a fine. 

While the penalties and 'settlements' may appear quite large, in some cases reaching tens of £millions, the simple truth is that these constitute painful slaps on the wrist to an industry which brings in over £14bn in GGY profit each year. The failure to seek criminal prosecutions means that the top management of such companies views regulatory action as being of very minor concern and one which does not require any significant change in approach to any lax handling of AML compliance. They know that they will not suffer any personal liability or reputational loss and also that their business will continue to make large profits based partly on the criminal activities of some of their customers. Further to this even when Operators are held to have been in breach of LCCP and AML requirements and are found to have received stolen and unlawful funds they are not under any obligations to divest themselves of any such monies except where explicitly asked to do so by the regulator. This means that licensed operators are knowingly being permitted to profit from criminal funds and are under no obligation to recompense the victims and rightful owners of those funds. 

Not only are they under no 'criminal' obligation to do so but it has long been the policy of many, as has been plainly illustrated in the Dhir v Flutter civil case, not to acknowledge any legal, moral or ethical obligation to do so and to actively oppose any actions taken by the victims to force them to do so. Each year there are dozens of reported cases where Operators' lack of diligence and AML compliance has actively allowed crimes to continue and persist beyond the point when reasonable due diligence by the Operator, such as the raising of Suspicious Activity Reports, would have caused such crimes to be discovered and stopped earlier than they were. Thus, procedural failings by the Operators have allowed them to profit from criminal enterprise and enabled preventable escalations in the severity of both the crime and consequence of it to both the offending Disordered Gambler, through increased sentencing, and also to the victim through increased financial losses. Despite Operators, and the official regulator, always claiming that each case results in lessons being learned and improvements being made which make re-occurrences less likely the inevitable truth is that even as you are reading this article there will be Operators actively benefiting from receiving criminally obtained funds deposited by Disordered Gamblers exhibiting clear signs of unaffordable and uncontrolled spending. 

But don't worry, they say that crime doesn't pay.

At GamHarm we fully understand the extreme behaviour that Disordered Gambling can lead affected individuals to engage in. We have in-house knowledge of just what it means to be convicted of gambling related crimes, how ill equipped the Criminal Justice, Courts, and Prison services usually are when faced with crimes driven by gambling harm, and how the partners and families of those convicted can be harshly treated by the systems in use.

From the contact which GamHarm have with Disordered Gamblers who have resorted to crime to fund their gambling addictions we know that this continues to be a significant and under reported issue. 

This is why one of the areas where we actively provide training and advice is on the intersection of Gambling Harms and Crime.