SBC News Voice of the Sports Betting Industry
The Securities and Exchange Commission (SEC) has disclosed that Flutter Entertainment has agreed to pay a $4m fine to settle violations of the US Securities Exchange Act.
The settlement was disclosed this morning by the SEC, and relates to Exchange Act breaches committed by Flutter’s igaming subsidiary PokerStars business activities within Russia.
An investigation by the US financial markets watchdog found that between May 2015 and May 2022, PokerStars is reported to have paid “approximately $8.9m to consultants in Russia in support of the Company’s operations and its efforts to have poker legalised in that country”.
The SEC charged The Stars Group Inc, the operating company of PokerStars, with failure to maintain internal accounting controls on its Russian activities, in which bookkeeping did not accurately disclose Russian consultant payments.
An investigation of the firm’s Russian links found that payments covered reimbursement for New Year’s gifts to individuals, including Russian government officials, itself apparently a violation of Flutter company policies.
Additionally, payments made by a consultant to Russian state news agency Roskomnadzor, which conducts online censorship, were also reimbursed by Flutter.
The SEC asserts that between 2015 and 2020, PokerStars failed to “both devise and maintain a sufficient system of internal accounting controls over its operations in Russia with respect to third-party consultants, and to consistently make and keep accurate books and records regarding its consultant payments in Russia”.
In response, Flutter has neither confirmed nor denied the allegations, but has agreed to pay a penalty of $4m and to cease and desist from any interactions with Russian third parties.
Additionally, the SEC has noted Flutter’s ‘cooperation and remedial efforts’, as well as the withdrawal of all of its brands from Russia after the Ukraine invasion in February last year, a move which was echoed across the betting industry.
In March 2022, PokerStars announced its full withdrawal from the Russian market, in response to the illegal invasion of Ukraine, as global businesses moved to follow sanctions imposed on the Russian government and economy by the international community.
Flutter formally completed its $11bn merger with The Stars Group (TSG) in May 2020. The merged accounts of the business outlined that the enlarged firm would “reduce its exposure to the Russian online market”
