Olympic Casino Group Fined €8.4 Million for Regulatory Failures in Embezzlement Case

The Lithuania Gaming Control Authority (LPT) has imposed a fine of nearly €8.4 million (£7.1 million/$9.1 million) on Olympic Casino Group Baltija (OCGB) for not properly monitoring the activities of a former private equity fund manager who is facing embezzlement allegations.

Šarūnas Stepukonis, a former partner at BaltCap Fund, is at the center of this case. Between 2016 and 2021, he engaged in gambling activities with Olympic Casino, which operates land-based and online casino brands in Lithuania, Estonia, and Latvia.

He is suspected of embezzling approximately €42 million from various companies managed by BaltCap, with significant amounts gambled away through different operators.

The allegations were publicly disclosed in January this year, and Stepukonis is set to face trial soon regarding the matter.

The fine was partly based on Stepukonis losing up to €6.4 million while gambling with Olympic Casino, as well as the operator’s lack of cooperation during the regulator’s investigation.

Detailing the case last week, the LPT determined that Olympic Casino breached multiple regulations concerning player monitoring. This includes a failure to verify the sources of player funds to ensure they were not derived from criminal activities. The LPT remarked that the measures implemented by the operator were “poor-quality and insufficient.”

Additionally, the regulator highlighted that Olympic Casino failed to report suspicious transactions to the Financial Crime Investigation Service (FNTT). Licensed operators must notify the FNTT if they have any concerns regarding a player’s activities.

“Stepukonis’ transactions had obvious signs that should have raised suspicions against the gambling operator,” the LPT stated. “However, the FNTT was not informed about this.”

Moreover, the LPT noted Olympic Casino’s failure to recognize Stepukonis’ irresponsible gambling behavior, even though he had a personal VIP manager assigning oversight to all his transactions.

In addition to these monitoring failures, the LPT emphasized that Olympic Casino had provided Stepukonis with a €1.3 million incentive package to encourage continued gambling.

Since mid-2021, Lithuanian licensed operators have been prohibited from offering financial incentives for users to gamble and potentially lose. Notably, Stepukonis shifted his gambling activities to Estonia just before this regulation took effect to capitalize on the bonus.

The LPT commented that a Lithuanian player attempting to register with the Estonia-based Olympic Casino site should have been redirected to the Lithuanian domain. However, this redirection did not occur in Stepukonis’ case.

“Instead of finding out whether Stepukonis had problems with gambling or informing the supervisory authority, Olympic Casino encouraged him to gamble even more,” stated LPT director Virginijus Daukšys.

“An individual incentive package was prepared for him. This could only be spent on gambling. Other incentive measures were also allocated.”

Upon concluding its investigation, the LPT identified a total of five violations of laws concerning the prevention of money laundering and the financing of terrorism, along with gambling regulations.

According to national law, the LPT can impose fines up to twice the “damage” incurred. Since Stepukonis lost €6.4 million gambling with Olympic Casino, this amount was deemed as the damage.

The lack of cooperation from Olympic Casino during the inquiry led the LPT to factor in an aggravating circumstance when calculating the fine.

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Furthermore, the case prompted the LPT to amend its operations and regulations to prevent future incidents. These changes include mandating that operators take action upon identifying irresponsible gambling, as well as providing real-time information to the LPT about such cases.

“Until now, there was no such obligation,” Daukšys noted. “Therefore, the LPT did not have information that would allow it to take preventive actions in advance.”

The LPT also pledged to conduct more frequent scheduled inspections of gambling operators. Additionally, the Lithuanian Ministry of Finance audited the regulator and found no significant operational deficiencies.