Britain's Gambling Commission also criticised the company's failure to follow anti-money-laundering procedures
Paddy Power encouraged a problem gambler to continue his habit until he had lost several jobs, his home and access to his children, according to a report by Britain's Gambling Commission.
The report also highlights failings to follow procedures to prevent betting machines being used to launder money from criminal proceeds.
The man identified only as Customer A in the report was a regular user of Paddy Power's fixed-odds betting terminals, which, according to the Guardian, allow users to place stakes of up to £100 every 20 seconds on virtual casino games.
In May 2014, staff at a Paddy Power shop learned the man was working five separate jobs to fund his gambling and had "no money", but did not see the need to reduce his gambling. This was relayed to senior staff, who suggested he be monitored.
Later that month, shop staff notified management that Customer A would be attending the shop less frequently, leading a senior staff member to order that steps be taken to increase his visits and time spent in the premises.
“This was grossly at odds with the licensing objective of preventing vulnerable people from being exploited by gambling,” said the Gambling Commission.
Staff reacted with "some discomfort" to these comments, and later observed Customer A spending heavily and looking "unwell and as if he had not slept for a while".
In August, shop staff learned he had lost all his jobs, was homeless, and no longer had access to his children.
Images: A person accesses the Paddy Power gambling website on a laptop computer. John Stillwell / PA Wire/Press Association Images
The Gambling Commission report also noted two occasions on which Paddy Power failed to take proper precautions to prevent money laundering.
In August 2014, a shop manager suspected Customer B of using Paddy Power terminals to launder Scottish banknotes. These concerns were passed on to senior management four times over six months but were "repeatedly overruled" and not reported to the company's money laundering officer.
Customer B was only banned after police raised fears about Scottish notes being used to launder criminal assets in London. Later checks revealed she could not validate ownership of a business she claimed to run.
In another incident, Paddy Power made "no direct inquiries" about how a frequent customer, who stole £250,000 from his employers, obtained his gambling income.
Paddy Power has pledged to donate £280,000 to "socially responsible causes" following the revelations. It also agreed to improve its anti-money laundering and social responsibility processes, and share its failings with the industry.
However, several politicians and lobby groups believe this is not enough, including Labour MP Caroline Harris, who said the report shows how "sections of the gambling industry appear to be virtually out of control."