Posted on: May 31, 2023, 07:46h.
Last updated on: May 31, 2023, 09:47h.
Entain, the global gaming giant behind well-known brands like Ladbrokes and, recently, Tab NZ, faces a challenge that could cause significant damage. In an ongoing investigation into its former operations in Turkey, the company faces accusations of bribery and illegal practices that might lead, at a minimum, to a massive fine.
In an announcement Wednesday, Entain stated that it anticipates being penalized by UK tax authorities for violations linked to its previous Turkish virtual betting enterprise. HM Revenue & Customs (HMRC) has been looking into the operations for years and has apparently uncovered damning evidence.
Entain also revealed that negotiations are underway with UK authorities regarding a sentencing agreement. In its own words, it said that it expects a “substantial financial penalty.”
Expecting the Worst
Entain, when it was known as GVC, may have earned as much as $284.39 million from its Turkish operations. It exited the market in 2017 after seven years and before its acquisition of Ladbrokes.
Entain, which received a record fine of $21 million in the UK last August for multiple failures, acknowledged that the ongoing HMRC investigation is addressing “historical misconduct.” It includes possible violations of the UK Bribery Act and other laws among former third-party suppliers and its own employees.
The company explained that the HMRC probe is linked to suspected corporate misbehavior at its former Sportingbet sports betting subsidiary. The majority of the charges allegedly fall under Section 7 of the Bribery Act, which covers circumstances where a corporation fails to stop an individual from presenting a bribe to a different company or individual.
At first, HMRC was investigating the misbehavior of external vendors providing services to Entain’s Turkish associate concerning payment processing. The probe was later broadened to encompass former subsidiaries and employees related to the associate.
In a separate statement, Entain chair Barry Gibson expressed the board’s eagerness to find a resolution for the “historical issue.” He emphasized that the company has made significant advancements by reorganizing its leadership and management staff, maximizing its income only from controlled or regulated markets.
What Happens Next
The BetMGM partner has already had to sit through years of scrutiny, and HMRC hasn’t indicated when it might reach a decision. Although the company expects a large fine, there’s no way of knowing how big it might be. There’s also a slim chance the outcome might impact its license in the UK.
There could be some relief, though. Entain is optimistic that HMRC might reduce the fine since the company is cooperating with the investigation and the violations refer only to past activity.
In the first trading hour on Wednesday morning, Entain shares saw a significant drop. Trading on the London Stock Exchange under the ticker ENT, the price was £1,329 (US$1,643). The stock closed at £1,380 (US$1,706) on Tuesday afternoon, well below its year-to-date high of £1,567 (US$1,937) from February 8.
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