Flutter Faces Scrutiny Over Gambling Practices in US Market

In 2018, British regulators sanctioned the UK arm of online gambling giant Flutter (FLTRF.L) after it failed to catch a major anomaly. The head of an animal shelter had been embezzling money from his employer to fund his bets, losing over half a million dollars over four years, according to the charity. The gambling watchdog forced Flutter to pay about $2.8 million for not protecting customers from obviously uncontrolled gambling and for not stopping the use of stolen money.

Flutter’s Chief Executive Peter Jackson publicly apologized for failing to intervene, saying the company had a responsibility to do so “when our customers show signs of problem gambling.”

However, over the next few years, another one of Jackson’s customers — this time in America — spiraled even further out of control, gambling millions of dollars of stolen money with Flutter’s U.S. brand FanDuel. Amit Patel, a mid-level finance manager at the Jacksonville Jaguars football team, deposited $20 million of his employer’s money into his FanDuel account between 2019 and early 2023, losing most of those embezzled funds, according to court documents. Patel and the British animal shelter chief each pleaded guilty to fraud.

Despite the enormous sums, FanDuel didn’t question the source of Patel’s funds until late 2022, his lawyer, Alex King, told Reuters. Patel’s annual salary was less than $90,000, King said. FanDuel not only didn’t intervene as Patel’s losses snowballed, according to King, but also assigned Patel a VIP customer representative who encouraged him to continue gambling.

Flutter and FanDuel didn’t answer questions about Patel. In Britain, where online gambling is more established than in the United States, Flutter and other bookmakers have recently acknowledged that some of their previous practices risked causing harm and have ended those practices. Some have also publicly accepted a responsibility to protect customers from problem gambling as cases of addiction, suicide, and gambling-related crime increased.

But in the booming American market, Dublin-based Flutter and Britain’s Entain (ENT.L) — which jointly owns U.S. sports betting company BetMGM — have not implemented many of those same safeguards. They also routinely employ practices they discontinued in Britain after admitting they put UK gamblers at risk, Reuters found, based on a review of corporate filings, company statements, executive testimony to lawmakers, job advertisements, and interviews with gamblers and former employees.

In Britain, the two gambling giants volunteered to curtail VIP programs that induce customers to spend more after acknowledging the potential for harm to gamblers. And Flutter introduced protections for bettors under 25 years old, saying “younger people can be more vulnerable to experiencing gambling harm.” Critically, advocates for gambling addicts say, the firms also accepted that keeping customers safe requires monitoring the affordability of their bets and intervening when there are signs of problem gambling.

The two companies haven’t acknowledged that they should be subject to some of the same requirements in America, such as affordability monitoring. What’s more, in the U.S. — where public and regulatory scrutiny of the online gambling industry hasn’t been as intense as in Britain — they employ some practices forbidden by regulators in Britain, including offering some online slots features such as enabling gamblers to set the game to play automatically without even having to watch the screen. Such features encourage gamblers to lose control of their gambling and suffer unaffordable losses, consumer protection advocates say.

Betting online in the U.S., like bricks-and-mortar casinos, is largely regulated on a state-by-state basis. The key difference is that online gambling involves new types of products and bets that can be placed round the clock via a mobile phone, a factor that consumer protection advocates say dramatically increases the risk of gambling harm.

In 2020, Flutter CEO Jackson told investors that its UK account managers who oversaw the activities of the most active gamblers weren’t incentivized for the amount customers spent, a point he stressed as “important.” It’s a “way of ensuring we don’t get on the wrong side of that affordability point,” he said.

In the United States, advertisements for roles as VIP account managers on FanDuel’s website visible as recently as April 2024 said candidates would be expected to “increase player activity and drive revenue.” After Reuters asked about the ads in April, FanDuel removed the phrase from its VIP job ads.

And Flutter in 2021 introduced a limit for UK customer bets on online slots games to £10 per spin, or about $13. The world’s largest online gambling company by revenues has said it did so because it had identified a trend in its data that “suggested that customer risk levels may increase more sharply” among clients wagering more.

In the United States, Flutter’s FanDuel — the online gambling market share leader in America — allows customers to bet $800 on each spin.

When asked by Reuters why Flutter uses practices in the United States that the company acknowledged as potentially harmful in Britain, Jackson said Flutter is committed to high standards of customer protection in all markets it operates in. “We help engineer and lead a race to the top in terms of the standards,” said Jackson, 48, speaking to Reuters in May on the sidelines of the company’s annual meeting in Dublin.

Flutter said in a statement the company operates “in strict accordance” with rules and regulations in the jurisdictions it is licensed in, and implements strategies tailored to the local markets it serves based on maturity and the competitive landscape.

The United States is Flutter’s largest and fastest-growing market in terms of revenue. Its FanDuel brand took more than $40 billion in online bets last year.

BetMGM co-owner Entain, in a statement, said it operates in dozens of markets and “it would simply not be feasible or commercially viable to have a ‘one size fits all’ approach.”

“It is true to say right now the U.S. is in its infancy, and there is less of the kind of protections that you see in the UK,” Entain’s Chief Financial Officer Rob Wood told Reuters in April. He defended BetMGM’s practices, saying “we don’t apply low standards anywhere.”

Entain’s BetMGM unit, the U.S.’s third-largest online gambling company by revenue, is a joint venture with casino operator MGM Resorts International (MGM.N). BetMGM said it is committed to providing a safe environment for customers and “meets its regulatory obligations while also going above and beyond to ensure a positive player experience and care.” MGM Resorts did not respond to requests for comment.

Together, FanDuel and BetMGM account for about half of U.S. online net gambling revenues.

Patel, 31, is currently serving a six-and-a-half-year prison sentence. It should have been clear to FanDuel “that he was gambling very large and growing amounts and having excessive losses,” said his attorney, King. “And they did nothing to dissuade or try to prevent him, or anything but encourage him to continue to gamble.”

‘Still Maturing’

U.S. Representative Paul Tonko, a New York Democrat who has drafted a proposed bill to regulate the online sports betting industry in America, said the Reuters examination suggests the companies are knowingly putting their U.S. customers in harm’s way.

In March, Tonko announced plans for a bill that would require sports betting operators to introduce measures to help prevent gamblers from spending more than they can afford, including not accepting deposits via credit card and assessing a customer’s financial circumstances before accepting large wagers. Tonko told Reuters the companies opposed his bill. Neither Tonko nor the companies provided Reuters with any specifics.

Several analysts told Reuters they don’t expect big regulatory pressure anytime soon for the online operators in America. Some state legislators have proposed advertising restrictions, but for now, the analysts said, state lawmakers are more focused on the potential tax revenue they can raise from online gambling than on curbing the industry.

Jackson, who became Flutter’s CEO in 2018, told Reuters he didn’t foresee federal regulation of the industry in America.

Entain’s Wood, who is 44 and like Jackson is British, said he expects the industry in America to voluntarily improve player protections over time: The market is “still maturing and it’s still working out the best way to self-regulate.”

Common measures aimed at protecting gamblers offered in the United States by FanDuel, BetMGM and others include company ads urging self-restraint, and offering clients the ability to set deposit limits or to “self-exclude” — temporarily suspend their accounts for a period of time. FanDuel and BetMGM also fund research into gambling behavior in America.

However, experts on gambling addiction say these types of measures are insufficient because addicts are not good at exercising self-restraint — a position Flutter and Entain have acknowledged in Britain.

Britain requires online betting companies to use data on client behavior to identify potentially compulsive or problem gambling. To help identify people who gamble beyond their means, operators also must seek evidence of the source of large deposits to try to prevent the use of stolen money. Companies also are expected to look at publicly available information, such as what someone does for a living or court judgments on unpaid debts, to check if a customer suffering significant losses can afford it based on their income or wealth. And, if the customer isn’t clearly in a position to afford the losses, the companies are expected to probe further, such as potentially requesting payslips.

Some consumer advocates say that anecdotally they have seen fewer instances of extreme problem gambling being missed and both Flutter and Entain have reported more frequent client interventions. Analysts also say both companies are shifting their client focus in Britain to recreational gamblers, away from very active ones.

Earlier this year, Flutter estimated the impact of new regulations currently being rolled out in Britain will cost up to 250 million British pounds each year in lost revenue.

Joe K, a recovering New Jersey gambling addict who spoke on condition that his surname not be used, said he lost around $250,000

betting mostly on online slots and casino games on a FanDuel account between 2020 and 2022.

Joe, who previously worked in marketing, said that as his losses escalated, a FanDuel VIP account manager assigned to him encouraged him to place more bets, touting it as the route to “recover the money you lost.” He added that the account manager made suggestions on games to try, alerted him to odds boosts, and was in “constant contact” with him when he stopped gambling for a week or so.

Joe, who was placed on a waiting list for inpatient rehab for gambling addiction last year, said he emailed Flutter in 2022 to complain about his experience with FanDuel. He said Flutter did not respond. FanDuel and Flutter declined to comment on Joe’s case.

“It made it worse that they kept contacting me,” Joe said, referring to FanDuel’s handling of his gambling habit. He added that FanDuel should have seen the signs: “If I’m losing tons of money and I’m chasing my losses, how are they not seeing that I have a problem?”

In Britain, Flutter and Entain have a financial incentive to tackle problem gambling. Flutter said 10% of CEO Jackson’s bonus last year depended on hitting targets such as reducing reliance on deposits from customers who have excluded themselves from gambling. At Entain, half of CEO Jette Nygaard-Andersen’s bonus depends in part on the firm achieving targets such as identifying problem gamblers and intervening.

“Good regulation should drive better outcomes for the industry and for the customer,” Jackson said. “It’s something we’ve been supportive of, and ultimately it’s led to an increase in standards.”

Flutter said in a statement that between 2021 and 2022, the percentage of self-excluded customers in its UK division dropped by half, and that a measure of risky player behavior also declined. Entain said it reported 17,000 interactions with British customers identified as having exhibited signs of problematic gambling behavior during the first quarter of 2023.

Young Gamblers

Flutter’s approach to customers who are young gamblers also varies widely between the U.S. and Britain.

In 2021, Flutter introduced deposit limits for customers under the age of 25, and has since used technology to help ensure its social media ads aren’t seen by people of that age group.

In America, FanDuel has a different approach to younger gamblers: actively targeting Generation Z. The firm’s social media campaigns have involved social media influencers such as Jake Paul, an online personality known for engaging millions of young followers.

Job advertisements for FanDuel on influencer sites have said the company wants to work with candidates who can help “educate a younger audience about responsible sports betting.”

FanDuel’s approach drew criticism last year from U.S. lawmakers including California Democratic Representative Tony Cardenas. “Young people shouldn’t be targeted by gambling companies on social media,” he wrote in a September 2023 post on Twitter, now known as X.

Asked about Cardenas’ criticism, FanDuel said it targets potential customers above the age of 21 with a message of “responsible betting.” The firm’s campaigns with social media influencers highlight the importance of gambling within “reasonable limits,” it added.

FanDuel and BetMGM’s VIP programs in America, meanwhile, aim to increase the amount that customers spend.

Job ads for VIP account managers at FanDuel and BetMGM in America emphasize how the roles are intended to grow revenue and encourage customers to continue gambling. FanDuel’s ad for VIP managers — removed in April after Reuters inquiries — said candidates were responsible for “reactivating inactive” high-spending clients. At BetMGM, a job ad posted on its website last month for a VIP manager in New Jersey said the person hired will “foster profitable growth of high value VIP players.”

In Britain, by contrast, the VIP programs of the two companies have been curtailed. In 2020, Entain ended its UK program altogether, saying such offerings could “risk detriment” to clients. Flutter significantly scaled back its UK program, saying it would focus only on a “very select few” clients.

But even in Britain, companies often fail to spot signs of problem gambling among VIP clients, said a former VIP account manager at Flutter who spoke on condition of anonymity.

“They’re not giving their life savings away to play on the site — they’re giving somebody else’s life savings away,” the former Flutter manager said. VIP clients in Britain often were gambling far beyond their means, he said, including a British doctor who lost his practice after gambling tens of thousands of pounds of his family’s money.

The former Flutter manager said that a fine line exists between VIP clients and problem gamblers. When questioned by Flutter managers about signs of problem gambling, some VIP clients have said they are losing too much money. But such admissions often are brushed off, he said. “They say: ‘Just keep an eye on him.’”

By fLEXI tEAM