Flutter Entertainment International CEO Dan Taylor acknowledged that historical lapses in responsible gaming and due diligence are a "source of significant embarrassment" for the FTSE 100 giant.
Taylor was speaking at the conclusion of a High Court case between Flutter and Amarjit Singh Deer, a Dubai-based businessman and former business partner of real estate developer Antonio Parente.
Parente is a troubled player who allegedly stole money from Dhir over a three-year period from 2013 to 2016 and then staked £282,000 of the stolen funds with an operator.
Dhir claimed that Parente worked as a representative for his real estate firm during this period and they signed a profit-sharing agreement.
He sued Flutter, the owner of Paddy Power, for failing to prevent this scam, and judges assessed the case under both UK and Dubai law. However, the judges sided with the bookmaker on specific issues, questioning Dhir's credibility as a witness as well as his version of the period under investigation.
Despite the legal victory, Taylor was disappointed with the decision and talked about the setbacks the business made during this period.
“While we have always maintained that this statement was unfounded, today's decision is not cause for celebration,” Taylor explained.
“The handling of Mr. Parente's account, whose deficiencies were acknowledged in 2018 as part of an agreement negotiated with the UK Gambling Commission, is a source of serious embarrassment for Flutter.
“Our business today is unrecognizable from what it was five years ago, but we know that as an industry we need to do even more to ensure that the most vulnerable are protected.
“We are committed to leading the race to the top of safer gambling and will continue to prioritize investment in this area,” Taylor added.
In the case, Judge Griffiths argued that Paddy Power knew that Parente was playing "with an unhealthy and unsustainable gambling addiction on an increasing and desperate scale."
He wrote: “Paddy Power knew his losses were unsustainable given his known income and assets.
“Paddy Power knew that when they tried to get information from him to show the source of wealth and the source of funds, they failed.
“The information he provided did not suggest that he could afford to play on such a scale or that he had legitimate sources of wealth from which to finance this game.
“They knew all this, but continued to take his bets and, indeed, provide game bonuses and generous hospitality to encourage him to play more. It only stopped when he himself stopped it by self-exclusion,” Griffiths added.
Parente originally had a Betfair account between 2008 and 2010, when he himself was eliminated from the game. He later moved from the UK to Dubai where he worked with Dhir in real estate.
He later tried to open a second Betfair account in July 2013, but that account was immediately closed. The court heard that Parente used a VPN to play in the UK from Dubai, where online gambling is illegal.
In 2014, Parente met with Ladbrokes General Account Manager Tony Carroll, who the court heard gave Parente free hospitality as a VIP client, including tickets to Premier League and Grand National matches. Carroll left Ladbrokes in 2015.
Parente was then given a £20,000 bonus to move to Paddy Power in September 2015 where he wagered £548,000 a day as Paddy Power staff continued to offer him free event tickets.
Carroll, along with his wife Erica, signed an agreement with a Dublin-based bookmaker whereby he was entitled to receive 25% of losses from his clients after he introduced them to the firm.
Paddy Power's internal emails refer to Parente as a "wild man" and placed 164 bets totaling £548,065 on the Playtech Instant Casino game, losing £15,000 in one day. However, he was later rewarded with a bonus of 7.5% from his losses.
Court documents show that Paddy Power conducted an extended due diligence on Parente in November 2015 when his losses reached £152,912. Despite the fact that this check was ordered and carried out, he was still allowed to continue playing during this period.
The bookmaker was also unable to link Parente Paddy Power's account to his previous records on Betfair. The Court also found that checks on AML sources and sources of wealth were not carried out during the period under review.
Parente Paddy Power's account was permanently suspended in June 2016 following an anti-money laundering (AML) violation.
However, the court heard that Paddy Power retail employees accepted £127,000 in cash without a prescription over an eight-week period before Parente closed the account by self-exclusion in October 2016.
Under cross-examination of Deere's attorneys, Taylor admitted that there were "undoubtedly compelling signs of gambling addiction" in Parente's case.
Taylor admitted that the bookmaker had failed in its duty in the case and that Paddy Power's responsible gambling procedures were "not good enough" at the time.
“Mr Parente was able to spend significantly more than was possible and that embarrasses me,” Taylor added, before pointing out that the UK gambling industry has made great strides in protecting vulnerable customers over the past few years.
In hearing the case, Judge Griffiths questioned whether lessons had been learned by Paddy Power from the handling of problem players.
He said: “These events happened only five years ago. All the witnesses before Taylor tried to defend what could not be justified.
“I can't comment on industry norms, but in my opinion Paddy Power knew he was dealing with a compulsive gambler who couldn't afford what he was doing and Paddy Power didn't really care.
"I don't see what industry norms can justify this," Griffiths concluded.
Parente lost a total of £3.4m with Paddy Power, Ladbrokes, bet365 and William Hill over a three-year period before admitting to cheating and gambling.
Parente confessed to cheating more than 20 people, including his own sister, to fuel his gambling addiction and was given a suspended prison sentence in 2017.
Paddy Power was fined £2.2 million by the UKGC in October 2018 for shortcomings in anti-money laundering and customer protection.
Paddy Power forfeited £498,508 of the money he received while paying £50,045 of the UK Gambling Commission's expenses to investigate the case.
In October 2020, Flutter canceled their existing rep agreements after setbacks.
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