Betting firms have been reaching secret deals with Britain’s gambling watchdog, including surrendering revenues for failings that are kept out of the public domain, the Observer can reveal.

The Gambling Commission has been placing some betting firms into special measures, enabling them to avoid formal action, which can include fines or the revoking of a licence. If a company agrees to implement an action plan and “divest any profit” from regulatory failures, the regulator typically does not make its failings public.

Campaigners say the regime has been a “protective bubble” for firms that may put gamblers at risk of harm.

The watchdog’s supervision of betting brands is under scrutiny as it faces a legal claim filed in the high court last week by Annie Ashton, whose husband, Luke, took his life after becoming addicted to gambling. An inquest highlighted failings by the brand Betfair, which had failed to flag Luke Ashton as a problem gambler.

Betfair had been in special measures at the time of Ashton’s death in April 2021, but this was only disclosed by the Gambling Commission after Ashton’s inquest had concluded, in 2023. Betfair’s failings had included inadequate identification of customers at risk of gambling harm. It also emerged that Betfair had voluntarily divested £635,123 to charities to reduce gambling harms, as well as agreeing an improvement plan – allowing it to avoid formal regulatory action.

This weekend, Annie Ashton called for the regulator to publish the number of firms it has put into special measures, the names of firms and the revenues surrendered.

“This information should be public knowledge and it should be scrutinised,” she said. “In Luke’s case, we now know Betfair was in special measures and the regulator should have been looking at them with even more scrutiny. Someone died under their watch.

“The whole situation with Luke was completely avoidable when you start unpicking what happened. You start to see these errors allowing for deaths to occur and lessons are not being learned at all.”

Contacted by the Observer last week, the Gambling Commission said it was unable to provide figures on the number of firms put into special measures in the last three years, or industry revenues surrendered for failings. It has previously refused a freedom of information request to identify the firms, saying it could jeopardise the willingness of companies to provide information on a voluntary basis.

Dan Webster, a solicitor at Leigh Day representing Annie Ashton, said: “It’s disturbing that gamblers can be using platforms but are not aware [the platforms] have been identified by the commission as failing to comply with standards which are in place to keep people safe.”

The inquest into Luke Ashton’s death found that gambling disorder was a contributory cause of death. A prevention of future deaths report issued by the coroner said Ashton had been assessed as “low risk” by Betfair and its algorithm to monitor gambling had failed to flag him as a problem gambler.

The deposits and losses made by Ashton were most intensive in the weeks leading up to his death, but he was only sent automated “safer gambling” emails without a personal intervention. The firm was effectively rewarding Ashton for his increased gambling activity, with increased bonuses and free bets, according to the legal team representing his wife.

Richard Clarke, a managing director at Flutter UK and Ireland, the parent company of Betfair, told the inquest in June 2023 it had been a tragic outcome, but that the brand was confident it had met the regulatory standards at the time. The firm did not disclose during the hearing that it had been in special measures at the time of Ashton’s death.

In its response to the prevention of future deaths report after Ashton’s inquest, the Gambling Commission disclosed it had conducted an assessment in December 2020 of brands within the Flutter group, including Betfair, four months before Ashton’s death. The brand was placed in special measures after the assessment indicated “there were failings in the process for identifying potential harm and interacting with customers”.

Betfair was removed from special measures in June 2021. The commission was informed of Ashton’s death in July 2021, but considered the activity on his account was prior to the completion of the special measures process, and it would “not be appropriate” to take regulatory action.

In November last year, the watchdog reiterated its decision that it would not subject Betfair to a formal regulatory investigation, despite questions over the timing and effectiveness of the changes made by the firm while in special measures. Annie Ashton’s claim in the high court for a judicial review seeks to overturn the watchdog’s decision not to launch a regulatory investigation into Betfair over Ashton’s death.

The claim states: “There exist real concerns that the defendant [the Gambling Commission] is failing adequately to regulate operators in order to protect people from gambling-related harm, particularly in the most serious cases where individuals have died and where there is concern that operator conduct has played a role.”

The Gambling Commission introduced its special measures regime in September 2020, under which firms can submit and agree an urgent action plan to rectify regulatory failings. Officials say the watchdog’s special measures policy is a helpful tool, giving betting brands the chance to rapidly rectify regulatory failings in advance of formal action.

Firms can “offer to divest any profits made from non-compliance”, with the proceeds going to good causes. Special measures should only be implemented where “there is no or limited risk of consumer harm”, there is not a history of protracted non-compliance, and there is an acceptance of failings.

A spokesperson for the regulator said: “The Gambling Commission does not automatically publish the outcomes of special measures activities given they are designed to give effect to swifter action on the part of the operator short of exercising formal regulatory powers.

“Most regulators have a range of different interventions they can make, and also a threshold below which they do not routinely publicise interventions they may have made. The Gambling Commission has consistently published enforcement outcomes and there is a register available detailing these actions.

“We extend our sincere condolences to the family and friends of Luke Ashton. In line with our statutory duties as the gambling regulator we will continue to take appropriate enforcement action where needed. The Commission’s formal regulatory powers remain in place.”

A Betfair spokesperson said: “We hold ourselves to the highest standards in the industry and we reiterate our sincere condolences to Mrs Ashton and her family over this tragic case. We have made a number of improvements to our player protections since early 2021.

“Unfortunately, due to live legal proceedings we are unable to comment any further at this time.”

Webster from Leigh Day said he was not convinced the industry had made sufficient changes to prevent further harm to people who are at risk but not identified as vulnerable gamblers. Annie Ashton has also separately launched a negligence claim against Flutter over her husband’s death. The firm is defending the claim, denying any breach of duties.

Webster said: “We’re not satisfied, based on the evidence heard at the inquest and information obtained subsequently, that any changes made by Betfair are sufficient to ensure that something like what happened to Luke won’t happen again in future.”