Sports Betting & AML: Don't Gamble On Compliance
Update provided by Vasilios P. Chrisos, Partner; Melissa Jameson, Director; and  Abby Singley, Senior Associate - Financial Services Advisory, PricewaterhouseCoopers Advisory Services

Since 2018, the sports betting industry has experienced significant regulatory change, from the US Supreme Court striking down a 1992 law which now enables states to legalize sports betting, to the UK Gambling Commission issuing an increased number of fines against sports betting companies.

As there is a rush to enter the sports betting market, new entrants may not be fully aware of their regulatory responsibilities and expectations. Regulators have recently significantly increased their scrutiny of gambling businesses' anti-money laundering (AML) responsibilities and sanctions programs. States in the US have also been implementing their own licensing requirements and regulations, creating a patchwork of compliance requirements. 

Recent enforcement actions in both the US and UK highlight the deficiencies with sports betting companies’ AML and sanctions programs,  including failure to provide adequate AML training for compliance officers and employees, inadequate controls to detect and report suspicious transactions, lack of adequate customer identification procedures, inadequate independent testing of the AML and sanctions program, gaps in the AML and sanctions risk assessments, and a poor culture of compliance.

In order to avoid similar regulatory consequences, companies in the sports betting space should take steps to develop an AML and sanctions policy with applicable jurisdictional supplements that is implemented across the organization. The AML and sanctions program should require an annual risk assessment, ongoing reporting to the senior management and board, employee training, risk-based customer due diligence, and risk-based suspicious activity monitoring and reporting.

Companies should also consider the technology necessary to meet their compliance obligations, including methods for incorporating geolocation into transaction monitoring. Simplistic, in-house solutions may offer advantages, especially those designed to be scalable over time.

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