Online gambling operator Stride Gaming has warned investors it expects to pay a £4m penalty for one of its subsidiaries contravening its UK license obligations.
On Wednesday, the UK-listed Stride issued a trading update previewing its final results for the 12 months ending August 31, ahead of its official annual report on November 21. The company expects revenue to come in around £85m (£3m higher than in FY17) while forecasting earnings of around £16m (down from £20m).
The company blamed the earnings shortfall on £4m in extra tax paid during the current fiscal year, part of the “backdrop of more challenging trading conditions” the company dealt with in FY18. These challenges also included “implementing further measures to ensure that Stride continues to maintain high standards in the provision of responsible gaming.”
On that last note, Stride announced in early August that the UK Gambling Commission (UKGC) had warned the company that it faced a “significant financial penalty following a review of the manner in which the Licensee has historically carried on its licensed activities.” Stride emphasized at the time that this notice wasn’t final but now appears to be taking the UKGC at its word.
Wednesday’s announcement revealed that Stride’s attorneys had advised the company to make a £4m provision in its FY18 final results to account for this expected UKGC spanking. That said, Stride said it had made “further extensive representations” to the UKGC and the regulator’s final decision on the size of the penalty will be issued sometime before the calendar year concludes.
Stride’s estimate of its financial penalty would put it among the largest the UKGC has levied in recent years, behind only the £7.8m paid by 888 Holdings in August 2017 and the £6.2m paid by William Hill this February.
Stride was likely among the 17 online casino operators whose businesses were put on notice in January following the UKGC’s review of the sector’s “approach to anti-money laundering and social responsibility.” In June, the UKGC’s new CEO Neil McArthur warned operators of a “relentless escalation” in financial penalties if the sector didn’t improve its compliance approach.
Stride, which holds licenses in the UK and Alderney, is the UK’s third-largest online bingo operator, overseeing a 170-brand portfolio that also offers online slots, social gaming and a B2B platform (Stride Together) that has partnered with UK land-based casino operator Aspers. In April, Stride hired Richard Sager as its new biz-dev director to help expand the company’s geographic and product scope.