Investigation and subsequent sanctioning of Spreadex Limited

Request

1. What financial alerts the Gambling Commission found Spreadex to have in place and which were deemed ineffective;

2. In relation to the following statement:

“one customer was able to deposit £1.7 million and lose £500,000 during the course of a one month period – although customer interactions had taken place they had not been sufficiently evaluated, and did not include considering the effectiveness of restricting the account.”

What customer interactions had taken place and on what basis had they not been sufficiently evaluated?

3. What were the “deficiencies in its [Spreadex Limited’s] responsible gambling policies, procedures, controls and practices, including weaknesses in implementation” identified by the UKGC?

Response

I am writing to you following your request for information regarding the UKGC’s investigation and subsequent sanctioning of Spreadex Limited (Spreadex). In this email I will address only the parts of your request which we have processed under the Freedom of Information Act 2000 (FOIA).

The remainder of your request, processed as a Subject Access Request (SAR) under the terms of the General Data Protection Regulation and Data Protection Act 2018, will be responded to separately.

The following elements of your request have been processed under the FOIA

1. What financial alerts the Gambling Commission found Spreadex to have in place and which were deemed ineffective;

2. In relation to the following statement:

“one customer was able to deposit £1.7 million and lose £500,000 during the course of a one month period – although customer interactions had taken place they had not been sufficiently evaluated, and did not include considering the effectiveness of restricting the account.”

What customer interactions had taken place and on what basis had they not been sufficiently evaluated?

3. What were the “deficiencies in its [Spreadex Limited’s] responsible gambling policies, procedures, controls and practices, including weaknesses in implementation” identified by the UKGC?

The Commission is a regulatory body with licensing, compliance and enforcement functions; through our regulatory activity, the Commission aims to protect consumers and the wider public, and to raise standards in the gambling industry. We release details of our enforcement activity through public statements.

The specific public statement in relation to this case can be viewed here:

https://www.gamblingcommission.gov.uk/public-and-players/guide/spreadex-limited-public-statement

The public statements will detail the nature of the failings by the operator and the amount of the fine or settlement. Further to this, the Commission also publishes a list of recent regulatory sanctions we have imposed on licence holders.

When we publish these statements and sanctions, we take care to present as much information as possible to ensure that lessons can be learned by operators. However, we must also be careful not to reveal any information that could hinder our ability to conduct investigations or enable those we may investigate to avoid detection.

The Gambling Commission do not provide comment on any information held regarding specific operators, unless it is in the public interest to do so. As such, we are unable to confirm or deny whether we hold any information within the scope of this part of your request.

Once licensed, gambling operators are subject to ongoing compliance requirements and are subject to regulatory action should they fail to meet their licence requirements.

Information collated as part of this process is used to assess whether a person or entity is fit to hold a licence.

I can confirm that information is held by the Gambling Commission falling within the scope of your FOI request. However, we consider these records to be exempt in their entirety by virtue of s31 of the FOIA.

Our considerations for engaging this exemption are as follows:

Law Enforcement – Section 31

Section 31(1)(g) exempts information whose disclosure would, or would be likely to, prejudice the exercise by any public authority of its functions for any of the purposes specified in subsection (2).

The Commission considers the subsections below apply and therefore the information is exempt from disclosure:

1. Subsection 31(2)(a) refers to the purpose of ascertaining whether any person has failed to comply with the law,
2. Subsection 31(2)(b) refers to the purpose of ascertaining whether any person is responsible for any conduct which is improper,
3. Subsection 31(2)(c) refers to the purpose of ascertaining whether circumstances which would justify regulatory action in pursuance of any enactment exist or may arise,
4. Subsection 31(2)(d) refers to the purpose of ascertaining a person’s fitness or competence in relation to the management of bodies corporate or in relation to any profession or other activity which he is, or seeks to become, authorised to carry on.

Public interest test

The factors the Commission has considered when applying the public interest test have been detailed below.

Arguments in favour of disclosure:

• The Commission is a public body which is required to regulate the gambling industry in the public interest. There is therefore a public interest in members of the public having confidence the Commission is being open and honest with the information it holds so that it can be held to account.
• It is important that the public are assured that the Commission is carrying out its functions in ensuring that any individuals or organisations who are involved in providing gambling facilities to the public have undergone the necessary assessments and will uphold the licencing objectives ensuring that consumers are protected.
• Disclosure of the requested information could demonstrate to stakeholders and relevant parties how the Commission is assessing licensees and, furthermore, this disclosure may encourage stakeholders to work with us and contribute to our programme of work, increasing confidence in the Commission as a regulator and its ability to uphold the law.

Arguments in favour of maintaining the exemption:

• The Commission has robust and effective processes and procedures in place which are utilised when assessing existing licensees. These procedures and processes have been put in place to minimise the risk of an operator continuing to provide gambling services where they do not meet the required standards. This demonstrates to the public at large that they can have confidence in the Commission’s compliance assessment processes.
• There is an expectation of confidence in much of the Commission’s work, particularly when discussing areas of a licensee’s compliance with the LCCP. It is the impact on this work of the Commission which is more likely to be affected by disclosure.
• The amount of specific information the Commission can release relating to our specific discussions about a licensee could lead to potentially non-compliant licenses altering their behaviour specifically to meet the Commission’s standards purely for assessment purposes. This in turn may impact on the Commission’s function of ascertaining a gambling operator’s fitness to carry out gambling activities.
• Disclosure of this information would also undermine the Commission's ability to uphold the licensing objectives which would impact on the trust and confidence of the public in it as a regulator.
• Further, disclosure of the requested information would prejudice the outcome of future assessments by the Commission by exposing assessment techniques and practices to the detriment of the public interest.

Weighing the balance

The Commission acknowledges that there is a public interest in promoting the accountability and transparency of public authorities and the importance of having sufficient information in the public domain to support consumers with their choice of operator, however, disclosure of the information would be damaging to the Commission as a regulatory body which ultimately serves to protect the wider public interest.

It is important that the public are assured that the Commission is carrying out its functions in ensuring that any individuals/organisations who are involved in providing gambling facilities to the public have undergone the necessary assessments and will uphold the licencing objectives ensuring that consumers are protected.

However, there is a strong public interest in preserving the processes that the Commission has in place to assess operators’ compliance with the LCCP and identify any operators who will be unable to comply with the licensing requirements. The public trust that the Commission has robust processes in place to assess operators so that when they use the services provided by an operator, they are confident that there has been sufficient scrutiny of that operator to ensure that they are protected. If this information were released it would undermine that confidence.

We consider that the public interest is better served by withholding this information, ensuring that consumers are protected through our processes rather than releasing information about our processes which in our view will not benefit the public as a whole.

Review of the decision

If you are unhappy with the service you have received in relation to your Freedom of Information request you are entitled to an internal review of our decision. You should write to FOI Team, Gambling Commission, 4th floor, Victoria Square House, Victoria Square, Birmingham, B2 4BP or by reply to this email.

Please note, internal review requests should be made within 40 working days of the initial response. Requests made outside this timeframe will not be processed.

If you are not content with the outcome of our review, you may then apply directly to the Information Commissioner (ICO) for a decision. Generally, the ICO cannot make a decision unless you have already exhausted the review procedure provided by the Gambling Commission.

The ICO can be contacted at: The Information Commissioner’s Office (opens in a new tab), Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

Information Management Team
Gambling Commission
Victoria Square House
Victoria Square
Birmingham B2 4BP