Entain, the gambling company listed on the FTSE, has issued a warning that it anticipates a significant financial penalty following an investigation into potential tax and bribery violations involving a former Turkish subsidiary. The investigation was initiated by UK tax authorities in 2019.
Entain, the owner of Ladbrokes and Coral, has informed its shareholders that it is currently in negotiations for a deferred prosecution agreement with the Crown Prosecution Service (CPS) and is seeking to resolve an inquiry by HM Revenue and Customs (HMRC). The investigations, which commenced in late 2019, are related to an online betting and gaming business that specifically targeted the Turkish market, where online gambling is prohibited.
Previously known as GVC Holdings, Entain owned this business from 2011 until December 2017 when it was sold shortly before acquiring Ladbrokes Coral for £3.6 billion.
Initially, Entain believed that HMRC was investigating its former third-party payment suppliers in Turkey. However, in July 2020, it disclosed that the tax agency was examining potential corporate misconduct by “an entity (or entities) within the group,” including offenses under section seven of the Bribery Act 2010, which pertains to the failure to prevent bribery.
In a statement, Entain acknowledged that the investigation encompasses a review of its former Turkish-facing business and acknowledged the possibility of historical misconduct involving former third-party suppliers and employees. The company continues to fully cooperate with HMRC and the CPS.
Entain emphasized that it cannot predict the ultimate outcome of the investigation and noted that prosecution of one or multiple entities is a possibility. Additionally, it stated that it is unable to provide a reliable estimate of the potential financial penalty.
The statement further highlighted that negotiations are ongoing and any resolution would require judicial approval.
In the previous year, Entain received a £17 million financial penalty from the UK Gambling Commission, which at the time was the largest ever imposed by the regulator. The company also faced additional licensing conditions and was instructed to implement an improvement plan. Following its exit from the Turkish market, Entain has committed to discontinuing operations in unregulated markets.