Online gambling business Betway has been hit with a record PS11.6 million ($A23 million) penalty package for a series of social responsibility and money laundering failings.

The Gambling Commission said that in one instance the operator failed to carry out source of funds checks on a "VIP" customer who deposited over PS8 million and lost more than PS4 million during a four-year period.

Betway also failed to carry out effective social responsibility interactions with a customer who deposited and lost PS187,000 in two days.

An investigation found that as a result of a lack of consideration of individual customers' affordability and source of funds checks, the operator allowed PS5.8 million to flow through the business which has been found, or could reasonably be suspected to be, proceeds of crime.

The majority of this money will now be divested and returned to victims, the Gambling Commission said.

The regulator probe also revealed inadequate management oversight and investigations into responsible personal management licence holders are ongoing.

"The actions of Betway suggest there was little regard for the welfare of its VIP customers or the impact on those around them," Richard Watson, executive director at the Gambling Commission, said.

"As part of our ongoing program of work to make gambling safer we are pushing the industry to make rapid progress on the areas that we consider will have the most significant impact to protect consumers.

"The treatment and handling of high value customers is a significant piece of that work and operators are in no doubt about the need to tackle the issue at speed.

"We have set tight deadlines for when we expect to see progress and if we do not see the right results then we will have no choice but to take further action."

The Betway case is the largest penalty package ever in Britain.

Previous cases include online gambling firm 888 being hit with a penalty package of more than PS7.8 million in 2017 and William Hill facing a penalty package of at least PS6.2 million in 2018.