Sky Vegas has been fined £1.2m for sending free casino “spins” to recovering addicts during the industry’s annual Safer Gambling Week.

The fine comes at a sensitive time for the British gambling industry, which has been at pains to show it has improved its attitude to social responsibility.

The government is in the middle of a review of gambling laws, with proposals to be published in a white paper expected within weeks. Yet major brands have been hit with a series of penalties for failing to protect vulnerable people in recent weeks.

888 Casino, which is in the process of buying William Hill’s UK assets, was fined £9.4m last week for multiple failings that led to customers racking up huge losses during the depths of the Covid pandemic. BetVictor was fined £2m in February for failures in fairness, money-laundering controls and social responsibility.

The new fine for Sky Vegas, which is owned by the global gambling firm Flutter, comes after it sent a promotional offer of “Bet £5 get 100 free spins” to 41,395 customers who had voluntarily self-excluded from gambling in an effort to stop.

A further 249,159 customers who had unsubscribed from the operator’s marketing emails also received the promotion.

“Here at Sky Vegas, we love the unexpected,” one marketing email read. “That’s right. Simply opt in, spend £5 and claim your 100 free spins. The best part? Whatever you win is yours to keep – that’s the fun in fair!”

The promotional message featured graphics of slot machines and the slogan: “Entertainment like no other”.

The incident, revealed by the Guardian in November last year, led addicts to warn that receiving such messages could have triggered a relapse.

Andrew Rhodes, the Gambling Commission’s chief executive, said: “Self-excluded customers are likely to be suffering gambling harm and should absolutely not be sent direct marketing that could tempt them back into gambling.

“We would advise all operators to learn from Sky Betting & Gaming’s costly errors and ensure their systems are robust enough to always prevent the self-excluded, and those who have clearly rejected marketing, from receiving promotional material.

“This latest fine would have been a lot higher had Sky Betting & Gaming allowed any of the self-excluded customers to actually gamble, failed to cooperate, and not taken decisive action aimed at preventing a repeat.”

Conor Grant, the chief executive of Flutter UK and Ireland, said the company took its responsibility to protect customers “extremely seriously” but on this occasion did not do enough”.

He added: “As soon as the error was identified, we ceased communications until the fault could be rectified, notified regulators and apologised to the affected customers. We also conducted a thorough investigation into what went wrong, the results of which were provided to regulators, and have put in place measures to ensure that this cannot happen again. We accept the Gambling Commission’s findings and once again apologise to those customers who we let down.”