How UK gambling guarantees fail to defend online punters | Travel & leisure

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When Everton FC players raced to face bitter Merseyside rivals Liverpool last month, their shirts were decorated, courtesy of a £10m-a-year sponsorship deal, as the Stake.com.

Until recently, an obscure online betting company, Stake.com, which specializes in controversial cryptocurrency betting, followed traditional bookmakers in sticking to the world’s most popular game. And football was an eager recipient of new sponsorship revenue.

Stake also spent a lot of money elsewhere. A partnership with platinum-selling Canadian rapper Drake means his fans can watch live video streams of him playing millions at a time. Stake has also splashed the big bucks on sponsorship deals with the Ultimate Fighting Championship (UFC) and Formula 1 driver Pietro Fittipaldi.

Equally lavish was Stake’s low-key 27-year-old co-founder Ed Craven, splashing out £70million on two mansions in the affluent suburb of Toorak in Melbourne, Australia, where Stake.com and its parent company, EasyGo, are based.

These extravaganzas are funded by the company’s huge annual revenue, but in theory none of this should come from customers gambling with digital currency in the US and UK, where it’s effectively banned.

Canadian rapper Drake has a partnership deal with Stake.com. Photography: Arthur Mola/AP

However, a survey by the Observer found that Stake.com’s lucrative and fast-growing empire could benefit from lax controls over customers – including those under 18 – who bet with crypto.

Last month the Observer asked Stake.com whether UK punters could use virtual private networks (VPNs) – widely available digital tools that create a fake location for a computer – to circumvent national restrictions on crypto gambling. Stake.com said it has “strict compliance processes” in place to prevent this. But in testing, these processes proved to be anything but rigorous.

By using a VPN, the Observer was able to access Stake.com’s crypto gambling services from a UK location within seconds.

When asked to verify age, reporters uploaded a photo of a pack of Strepsils throat candy instead of a legitimate ID like a driver’s license or passport. At first that turned out to be enough.

Reporters were then able to purchase crypto through Stake.com, deposit it into a gambling account, and continue losing money on Stake.com slot games, such as Sugar Rush and Starlight Princess. He was also able to transfer the remaining funds to an online bank account. They could even buy crypto with one bank account and transfer the funds to another account, with Stake.com effectively operating as a digital currency transfer provider.

It took more than 48 hours for Stake.com to suspend the account, after finding that a packet of Strepsils was not proof of adulthood. While the company eventually cracked down on the fake ID, subsequent tests suggest that an authorized adult could have continued to gamble with the crypto, even though the Gambling Commission has yet to give a license operator permission. to offer such a product in the UK.

There is reason to believe that crypto VPN gambling may be vulnerable to those looking to gamble using the proceeds of crime. According to the reporter.london website, an unnamed crypto-trading platform is preparing to sue Stake.com, claiming that one of its traders stole £350,000 of ethereum digital currency and bet it on Stake, using VPNs.

Asked about the Observer‘s crypto bets test, Stake.com said, “As with all companies in the industry, Stake.com encounters unauthorized users trying to evade geo-blocking via VPNs. Stake is aware of an account that was recently opened as a result of using a UK VPN and submitting a fake address and other user information, all in violation company terms of use. This account has been detected by Stake’s internal compliance processes and closed.

“Stake.com uses anti-money laundering measures on its site. Fiat to cryptocurrency exchange services are offered by third-party vendors (not Stake.com), who also have their own processes and security requirements. The company has also offered assurances of its commitment to safer gaming.

However, one of Stake.com’s most important business partnerships is with xQc, a Canadian internet personality whose real name is Félix Lengyel, who has more than 11 million followers on the live video platform Twitch.

A UFC featherweight championship in Las Vegas:
A UFC Featherweight Championship in Las Vegas: The fight promoter has a big sponsorship deal with Stake.com. Photography: Jeff Bottari/Getty Images

With his bombastic style and machine-gun talk, 25-year-old Lengyel regularly draws tens of thousands of viewers at a time to his streams, in which he plays on the Stake.com slot.

Lengyel has repeatedly stated that he is addicted to gambling, and at one point even pledged to stop creating slot video streams. Yet after a brief period away from the betting world, he signed a deal with Stake.com and returned to the fray in 2022.

Under the terms of his deal, Lengyel gets a discount when people click through to the Stake.com site through his Twitch channel. He claimed earlier this year to have funneled $119 million in bets to the company.

Like all licensed operators, Stake.com does not allow anyone under the age of 18 to play. So far, however, anyone over the age of 13 can watch xQc’s streams on Twitch. Last month, Twitch moved to ban casino and slot streams from its platform, naming Stake.com as one of the operators whose games it would no longer help promote. This was in response to threats from high-profile streamers, some of whom had watched in horror as gambling streams began to overtake video games as the site’s primary product.

So it was a key marketing tool lost, but Stake.com still has its high profile sponsorship deals, including with English football teams Everton and Watford.

These deals are possible via controversial but legal ‘white label’ deals, under which a foreign brand wishing to have a presence in Britain can rely on a license already held by a local operator, without going through its own process. of license.

Stake’s white-label deal is with Isle of Man-based TGP Europe, a company which is also the entry point for Leeds United sponsor SBOTOP, a Philippines-based online bookmaker, and the Hull City’s deal with Kenyan-owned SportPesa. The arrangement allows Stake to offer gambling services with fiat currency (regular currency) but not crypto, in the UK.

White labeling is a backdoor used by some of the little known betting companies that sponsor English football teams. The deals allow them to reach the eyeballs of football-watching punters in markets such as China and Thailand, where the game is nominally illegal and cannot be promoted.

But there are also questions about whether overseas companies are avoiding a moral obligation to help tackle gambling addiction in the UK. One important way that major licensed operators such as Ladbrokes and Bet365 do this is by donating 0.1% of their winnings as a voluntary levy to the GambleAware charity.

But Stake.com is not technically the licensed operator; TGP Europe is. And last year, TGP paid GambleAware £2,000, which would imply its earnings were just £2m. And GambleAware’s donor list does not mention Stake.com.

“White labeling allows companies like Stake to skip the due diligence of a licensing process, allowing them to advertise and access the UK market,” said Matt Zarb-Cousin of campaign group Clean Up. Gambling.

“All gaming companies should have to apply for a full license if they want to operate legitimately here. Gambling Commission and DCMS [Department for Digital, Culture, Media and Sport] shouldn’t endorse the white-label system, which privileges those who don’t want to go through the licensing process.

Even if Stake.com acquired its own license to operate in Britain, there is no guarantee that it would have much to fear from the regulator.

In August, the Guardian reported that Everton FC had told Stake.com to stop using the club’s brand in a promotion that offered a $10 free bet to anyone who bet $5,000 in a month.

This was not a question for the Gambling Commission. The offer may have been masked by imagery of a 144-year-old English football stalwart, but it was priced in dollars and, ostensibly, unavailable to UK punters – except those who knew how to use a VPN, that is.

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