Raising the bar: Why FSB isn’t waving the white label flag to regulation

FSB has implemented ‘state-of-the-art systems’ for customer protection to prevent future issues for its white label platform.

Dave McDowell, FSB CEO, added that the recent crackdown on white label operators by the UK Gambling Commission (UKGC) shows that the regulator isn’t afraid to take “pretty severe measures” against companies who don’t raise their game when it comes to customer protection, anti-money laundering (AML) and responsible gambling.

He was speaking at last month’s Betting on Sports, where he admitted that the UKGC review of FSB – and the termination of its relationship with 1xBet and temporary suspension of a second site – has somewhat soured a period of fantastic growth for a company that takes such pride in “compliance, integrity and a commitment to regulated markets”.

“Unlike so many companies in the space, we’ve never worked in black markets,” explained McDowell. “We’ve always focused on the regulated markets. In this instance, we brought on a partner (1xBet), we didn’t do the proper due diligence on that partner and we’re paying the price for cutting corners in our due diligence process.”

It has been a turbulent time for white label platform providers in the UK. Having been hit with a suspension of its B2C licences, EveryMatrix exited the market just a few weeks later after deciding that the impact of this ruling had left the business “irreparably damaged”.

“It’s a sign of our times,” said McDowell. “The regulatory environment has changed in the UK very quickly over the last few years; we’ve seen the UKGC focus on the larger operators, then the FOBTs and now the focus is on white label operators. 

“There’s a very strong message that the Commission is trying to send to the industry which is as a white label operator, you have a responsibility to make sure that any third parties that you bring into the industry have been subjected to the proper due diligence. 

“That’s a lesson learned on our side, but at the same time we’ve made huge investments into both our AML processing and safe gaming processing. I believe we’ve actually got state-of-the-art systems now for customer protections.”

Last month’s failings are likely to increase calls for more stringent rules over the white label structure allowed under the Gambling Act, with Labour Deputy Leader Tom Watson one of the biggest advocates for a wholesale review of the format. 

However, McDowell reserved praise for how FSB, and the industry as a whole, has reacted to the new regulatory environment. He continued: “Across the board, we’ve got an industry that 10 years ago was operating without much regulation at all.

“The AML and Safe Gaming standards have risen rapidly and I believe that most companies have gone through a painful and expensive process of raising their standards or handing in their licence.”

“We recently invented a piece of artificial intelligence (AI) that ranks customers on the most likely to have a problem with responsible gambling. This is part of a multi-metric system set up to identify customers in different ways, for example those who withdraw frequently or those who spend a lot of time on the site late at night. 

“Where we are now from 12 months ago is completely different. If companies don’t make the necessary transition, we’re seeing the UKGC isn’t afraid to take pretty severe measures.”

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