Videoslots fined £650,000

The UK Gambling Commission (UKGC) has fined Videoslots Limited £650,000, revealing serious shortcomings in its anti-money laundering (AML) and player protection systems. The case highlights the limitations of automated systems when they are not supported by rigorous human oversight.

Ineffective deposit limits and losses in excess of limits

The UKGC’s investigation uncovered a mechanism for limiting monthly deposits at Videoslots that was not working as intended. According to the regulator, these automatic caps, which were supposed to protect players, were calculated on a calendar month basis and did not include the first deposit. As a result, some customers far exceeded their limits.

For example, one player with a £3,000 limit lost £5,000 in one month. Another, with the same limit, lost £5,000 in less than 24 hours. A third spent £7,500 over 18 days, when his limit was only £2,000.

These cases illustrate a major shortcoming: Videoslots’ automated systems failed to trigger human interaction or intervention when losses exceeded set thresholds.

Even more alarming: one customer lost £6,550 in just three active days over a two-month period, and… never received any contact from the operator. 

Anti-money laundering failings 

The UKGC has not only pointed the finger at failings in player protection: it has also denounced serious failings in controls against money laundering (AML) and terrorist financing.

In one particularly worrying case, a customer deposited over £75,000 in the space of 16 days via digital prepaid vouchers without adequate controls. After his deposits, he transferred winnings to four different bank accounts, sometimes logging in from outside the UK.

John Pierce, Director of Enforcement at the Commission:

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

Despite these signals, the automated scoring system did not promptly check the source of the funds. The operator assumed that the funds were being recycled without any tangible proof, and did not apply enhanced vigilance in good time. 

In another case, a customer frequently deposited and withdrew funds over the course of a month: the Commission notes that, instead of increasing its level of risk, Videoslots assumed that these flows came from winnings recycling, without investigating further. 

The algorithm, an insufficient safeguard

The heart of the problem, according to the UKGC, lies in over-dependence on automated systems. The investigation revealed that Videoslots used an algorithm to detect risky behaviour, but that it regularly missed critical signals.

John Pierce:

“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 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.”

A severe sanction

In addition to the £650,000 fine, the UKGC has issued Videoslots with a formal warning and required it to undergo an independent audit. This measure is designed to ensure that the operator genuinely strengthens its AML policies and responsible gambling arrangements. 

John Pierce: 

“Alongside the financial penalty and the necessary steps already taken by Videoslots to address our findings, the operator must also complete an independent audit and we will monitor the outcome of this closely.”

The audit will check not only the design of the surveillance systems, but also governance, risk management, escalation procedures and team training.

In response to this sanction, Videoslots said it had cooperated throughout the process and taken immediate corrective action. CEO Alexander Stevendahl disputed some aspects of the regulator’s findings, insisting that no player had actually exceeded their personal limits. Suggesting otherwise, he said, could cause confusion in the industry.

In addition, he pointed out that one of the cases of money laundering referred to by the Commission had first been identified and reported by the operator itself, well before the investigation began – a point he felt needed to be emphasised to provide full context.

In the Commission’s view, although Videoslots cooperated during the investigation and took immediate steps to correct certain shortcomings, the breaches identified were sufficiently serious to justify a heavy penalty.

The heavy fine of £650,000 imposed on Videoslots by the UK Gambling Commission is a reminder that automated systems, however sophisticated, are no substitute for human vigilance and responsibility. Between ineffective limits, faulty algorithms and high-risk payouts, the operator was found wanting on several levels.