William Hill mistakes a thief for a high roller. What are the odds?

Would someone who earned £365,000 a year – that's about €415,000 – spend his days and nights glued to a screen, gambling huge amounts of money on the William Hill betting site?

Most of us would think it highly unlikely, but not, apparently, staff at the bookmaker. Ignoring money-laundering and problem-gambling regulations, they allowed one punter to deposit the astonishing sum of £541,000, or €613,000, in their machines over 14 months.

Staff did have “a verbal conversation” with the customer but made no further probes, simply assuming, given the huge amounts being wagered, that he really did earn more than double the prime minister’s salary.

In truth the customer earned just £30,000 a year and was funding his gambling habit by stealing from his employer.

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That's just one shocking example of lax controls cited by the industry regulator in the UK, the Gambling Commission, on Tuesday as it hit William Hill with a penalty package of at least £6.2 million, or €7 million, for failing to protect customers and prevent money laundering.

The offences took place between November 2014 and August 2016, the result of what the regulator described as systemic senior management failure.

Tom Watson, the deputy leader of the British Labour Party, who has been fiercely critical of the gambling industry, was even more blunt in his assessment: "This is an industry that talks about 'responsible gambling'. They're turning a blind eye to dirty money."

It has come at a particularly bad time for William Hill and the rest of the industry, as the British government prepares to deliver its final decision on just how hard a crackdown to impose on fixed-odds betting terminals. Dubbed the crack cocaine of gambling, these are the machines that allow punters to bet as much as £100 every 20 seconds, racking up huge losses in a single session.

The industry has argued that, if the maximum stake is set too low, thousands of jobs will be lost. But it seems the government is at last prepared to take meaningful action, and a cut to just £2 looks likely, despite the hit to treasury coffers.

If the government were minded to show the industry some leniency, a cursory look at the full text of the William Hill judgment should persuade it otherwise. The regulator cites another case in which a customer racked up escalating losses of £112,000, or €127,000, over 18 months. William Hill identified the punter as a potential problem gambler, but the bookie’s only response was to send two automated social-responsibility emails.

According to the regulator, at least 10 customers were able to use stolen money, or the proceeds of criminal activity, to gamble large amounts. This included substantial thefts from employers, fraud offences involving the elderly, and money laundering.

William Hill must now pay £5 million to charity and give up a further £1.2 million it earned from the 10 criminal customers. That sum could rise if more cases are identified.

Delivering the penalty – the second largest it has imposed – the Gambling Commission said betting firms must be "constantly curious" about where the money they take is coming from.

And that clearly does not include assuming that a prolific punter earns a six-figure salary.

Is Arcadia up for sale?

Is Philip Green's Arcadia empire up for sale? The retail tycoon says not, dismissing weekend reports that he's in talks with a Chinese company about the sale of all or part of his business in typically robust style.

The story, in the Sunday Times, was "totally untrue", said Green, denying that he or any of his directors had spoken to the mooted bidder, Shandong Ruyi. Pressing home the point, Green claimed the report was further evidence of a "personal vendetta" against him and his companies. "The 22,000 people who work at Arcadia should not be subjected to this type of malicious rumour-mongering."

The Arcadia empire, which takes in Topshop, Miss Selfridge, Burton, Dorothy Perkins and Wallis, has been struggling against online rivals. A sale would bring to an end the billionaire’s career as one of Britain’s most controversial businessmen, following his messy exit from BHS less than a year before it collapsed in 2016.

MPs didn’t wait for Green’s denials on Arcadia, immediately insisting that he must ensure the retail group’s pensions are fully protected in the event of a sale.

The Sunday Times, meanwhile, is standing by its report and promising further revelations this weekend. Despite his denials, the spotlight is now firmly back on Green and his remaining retail empire.

Fiona Walsh is business editor of theguardian.com