Rishi Sunak’s closest Commons aide, Craig Williams, has been interviewed by Gambling Commission officials over his bet on the timing of the general election, Sky News understands.

He has been cautioned and interviewed by two ex-police officers and a former HMRC official who are now investigators at the commission, according to a Gambling Commission insider.

It is understood the commission is now conducting a “live criminal investigation” and Mr Williams could face prosecution, a caution, or no further action, depending on the evidence.

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The interview is said to have begun this morning and then resumed this afternoon after a lunchtime break.

The interviewing of Mr Williams, Mr Sunak’s parliamentary private secretary and Conservative election candidate in Montgomeryshire and Glyndwr, comes 24 hours after the Tory high command said it could no longer support his candidacy.

Responding to being dropped as a candidate, Mr Williams issued a defiant statement admitting he “committed a serious error of judgment, not an offence” and declaring he would continue to fight to win his seat.

“I am fully cooperating with routine inquiries from the Gambling Commission and I intend to clear my name,” he said.

Mr Williams also said due process was important and “the commission must be allowed to do its work”.

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It was revealed two weeks ago that Mr Williams placed a £100 bet on a July election just three days before Mr Sunak announced the election on 22 May.

He was reported to have placed a bet with bookmakers Ladbrokes on Sunday 19 May in his Welsh constituency, which was the Tories’ safest seat in Wales at the 2019 election, with a majority of over 12,000.

Admitting he made the bet, Mr Williams said: “I put a flutter on the general election some weeks ago.

“This has resulted in some routine inquiries and I confirm I will fully cooperate with these.”

A Gambling Commission spokesperson told Sky News: “We do not comment on how investigations are run.”

Mr Williams and the Conservative Party have also been contacted for comment.

The other candidates for Montgomeryshire and Glyndwr are:

Jeremy Brignell-Thorp, Green Party

Oliver Lewis, Reform UK

Glyn Preston, Liberal Democrats

Elwyn Vaughan, Plaid Cymru

Steve Witherden, Labour