UK paper: Tallinn online gaming firm one of several exploiting loopholes

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Roulette Wheel (photo is illustrative). Source: RalfR/Wikimedia Commons

A Tallinn-based firm joins several others mentioned in a recent article appearing on the website of UK paper The Sunday Times which, the paper says, use a workaround on gaming regulations in that country in their sponsorship of top-flight British professional football clubs.

Vice-chair of the U.K. parliamentary group on gambling-related harm and former Conservative Party leader, Sir Iain Duncan Smith, recently hit out at the practice of "white labeling"  – where a firm pays another to use the latter's license in a particular market  – calling it an: "Appalling example of the abuses of the gambling industry," The Sunday Times reported in its article, by David Collins.

One expert told the daily that the set-up allows operators who may not otherwise meet requirements for a full U.K. Gambling Commission license to still operate in that country's market, and also, thanks to the popularity of English Premier League (EPL) football in particular, to Asian markets, even in those states, such as China, where gambling is illegal.

The issue of problem gaming has also long been one of concern in Britain, while gambling losses there stood at a reported £14.4 billion (close to €16.8 billion) in the year to March 2019, The Sunday Times reported.

At the more rough-and-ready end of the market, The Sunday Times said, firms using white labeling or other workarounds have taken advantage of the global success of EPL football to launder proceeds from criminal or other dubious activities, with sums stretching into the millions, though, the paper noted, there was absolutely no suggestion that any of the companies it referenced in its piece had engaged in any such activity.

As many as 700 of what the paper calls unlicensed gambling firms make use of white labeling, including Fun88, shirt sponsor of EPL side Newcastle United, Yabo, Manchester United's Asia betting partner in 2019, and Sportsbet.io, part of a group which has offices in Tallinn and which, The Sunday Times said, was also a betting partner of EPL team Arsenal F.C.

The article said that the white-label-listed firms it surveyed, including the above and also the betting partner of Gareth Bale's Welsh national football team, as well as Sportsbet.io, have as their umbrella license-holder an Isle of Man-based firm called TGP Europe.

The Sunday Times reported that in general, some companies employing white-labeling fail to verify adequately the source of their customers' funds and do not properly supervise potential problem gaming customers, adding that in one case a player was able to create 14 accounts on the same site, without checks or queries, ultimately losing £209,000 (€243,412) in the process.

The article also noted that while the U.K. Gambling Commission says it conducts thorough background checks and investigates potential issues where needed, it is also set to review legislation, a development which may lead to a tightening-up of the regulations governing white labeling.

The original Sunday Times piece is here.

Sportsbet.io also shirt sponsor of Southampton F.C.

Southampton F.C., another side currently in the EPL, reported on its official site in April that it had renewed its shirt sponsor contract with Sportsbet.io for a further three years.

Sportsbet.io and several other sites belonging to the same assortment of brands and firms are operated by the Coingaming Group, which, as reported by ERR News, has offices in Tallinn.

The main, relevant Estonian entity, the Heathmont Group, is registered locally as a B2B services provider.

The group's sites mostly offer sports betting, solutions for online casino developers, bitcoin gaming and also online slots.

The .io extension is the country code top-level domain (ccTLD) reserved for the British Indian Ocean Territory (BIOT), principally comprising the Chagos Archipelago, whose native population were evicted from their homeland by the British Government between 1968 and 1973 and whose largest island, Diego Garcia, was set aside for a joint U.K./U.S. military base.

The extension is a popular one with tech firms as a whole, with one explanation being that its name resembles that of an i/o (in/out) port on a computer.

The EPL is avidly watched in China, and gaming firms' sponsorship shirt logos are clearly visible, and while gambling is illegal on the mainland, the regime reportedly faces challenges with regard to the digital sphere.

The domestic tax authority in Estonia, the MTA, lists a couple of dozen firms which have a license to operate in Estonia itself. Accessing non-approved sites from an Estonian IP address returns information that the site is blocked.

Proceeds from a domestic gambling tax are often used to fund social projects.

Moves have also been made in Estonia to address the issue of problem gaming. Tanel Kiik, then-social affairs minister, now health minister, said late last year that a gambling addiction center was to be set up, adding that the arrival of the coronavirus pandemic had been accompanied by a surge in problem gaming.

A spokesperson for one of the larger and more visible online sports betting companies based in Tallinn also addressed the issue recently in a piece on the website of evening paper Õhtuleht (link in Estonian).

Sportsbet.io: We take our legal and regulatory obligations very seriously, and are fully compliant

ERR News contacted Sportsbet.io, who issued the following statement in relation to the Sunday Times piece:

"Sportsbet.io is a gambling operator that takes its legal and regulatory obligations very seriously. The group is licensed to undertake its activities by relevant regulatory authorities across a variety of jurisdictions, including Estonia, the U.K., Malta, Australia and the Isle of Man, and is compliant with all applicable legislation," a spokesperson from the group commented.

"There is no legislation which prohibits the supply of remote gambling services via a white label into the U.K. by operators who are based outside of the U.K. Our U.K.-facing brand, sportsbetio.uk, holds a valid U.K.G.C. gaming license, and operates within, and is fully compliant towards, all regulations under the license," the spokesperson continued.

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Editor: Andrew Whyte

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