In the wake of intensifying scrutiny over compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws, the Australian Transaction Reports and Analysis Centre (Austrac) has increased its vigilance on betting companies operating down under. Bet365, a prominent name in the global betting industry, has now found itself in the crosshairs of Austrac as it calls for further investigation into the company’s adherence to the AML/CTF Act 2006.
This decision by Austrac comes on the heels of an audit ordered in 2022 that was designed to assess Bet365’s compliance with the AML/CTF regulations. The audit’s findings indicated the need for a more in-depth inquiry, suggesting potential shortcomings in Bet365’s systems intended to thwart money laundering and terrorism financing activities.
Brendan Thomas, Austrac’s chief executive, emphatically stated that “Corporate bookmakers must have robust systems in place to ensure they can manage and mitigate risks associated with money laundering and terrorism financing.” He added that insufficient processes leave businesses alarmingly exposed to criminal exploitation.
Austrac’s powers in enforcing compliance are significant, including the imposition of hefty fines. Bet365 now treads in uncertain waters, as non-compliance could result in severe repercussions. Their situation is a sobering reminder, drawing parallels with Crown Resorts, which found itself on the wrong end of an Austrac agreement in July 2023. Crown was handed a monumental AU$450 million penalty for grave AML and CTF failings across its Melbourne and Perth casinos.
Within the dossier of Crown’s transgressions were instances like maintaining ties with a casino junket operator linked to organized crime until 2021, despite being aware of mounting allegations. Similar scrutiny surrounded Entain, another betting giant, which has been under investigation by Austrac for AML/CTF concerns since September 2022. Austrac has suggested that Entain’s review could spotlight additional bookmakers.
The Bet365 probe is part of a broader trend of Austrac stiffening its resolve against non-compliance in the betting sector. In 2022, Austrac also initiated federal court proceedings against Star Entertainment Group and SkyCity Adelaide, both accused of violating AML and CTF laws.
The fiscal impact of these allegations can be severe. SkyCity anticipated a possible AU$45 million civil penalty resulting from Austrac’s probe, prompting the company to make provisions in advance. Bet365, despite an 18.9% growth in sports betting and gaming revenue to £3.39 billion during the 2022-23 financial year, recorded a loss of £61.2 million. This downturn followed a profitable year with earnings of £42.8 million.
A deeper dive into Bet365’s financial reports shows a 4.1% rise in direct costs to £516.6 million, and a 42.2% increase in administrative expenses to £2.93 billion. The company experienced an operating loss of £37.3 million, contrasting with the prior year’s £15.4 million profit. However, Bet365 remains optimistic, citing its increased expenditure as a long-term investment for generating higher revenues. As part of its expansion strategy, Bet365 has been launching operations across multiple US states and in Ontario, Canada, where it has secured a leading position.
Industry analyst Ed Birkin of H2 Gambling Capital weighed in on Bet365’s strategy, predicting promising results. “I would expect Bet365 to be very much competing with the Tier 2 operators such as BetMGM and ESPN Bet in terms of sports betting. I view the US as a big opportunity for the group,” Birkin opined.
Amidst a landscape where compliance is non-negotiable, Bet365 will need to navigate the regulatory maelstrom while looking to cement its standing in new markets. As the company focuses on growth, the resolution of Austrac’s investigation will certainly be a critical juncture in its ongoing narrative.
