SBC News Voice of the Sports Betting Industry
Entain Plc has this morning notified investors that it is engaged in ‘advanced talks’ with the Crown Prosecution Service (CPS) in response to a ‘deferred prosecution agreement’ (DPA) related to an ongoing investigation by HM Revenue & Customs (HMRC).
The investigation relates back to 28 November, 2019, when UK subsidiary Entain Holdings Limited received a ‘production order’ from HMRC related to its former Turkish-facing online betting and gaming business.
This Turkish business, operated by GVC Holdings (formerly Entain) from 2011 until its divestment in 2017, was initially believed to be the primary focus of HMRC’s inquiry.
The sale of subsidiary, Headlong, was finalised in early November 2017, to Ropso Malta for a performance-related earn-out consideration of up to a maximum amount of €150m in cash – receivable on a monthly basis across a five-year period.
The initial stages of the investigation targeted former third-party suppliers involved with processing payments for online betting and gaming in Turkey. However, a notable turn occurred on 21 July, 2020, when HMRC widened the remit of its inquiry.
Entain explained that “HMRC was widening the scope of its investigation and was examining potential corporate offending by an entity (or entities) within the Group”.
HMRC’s expanded investigation now includes allegations of violations under section seven of the Bribery Act 2010, involving potential misconduct by entities within the group.
Furthermore, Entain recognises possible historic malpractice that might have involved former third-party suppliers and past employees.
The investigation is yet to be concluded, but the FTSE gambling group believes that it will likely face a ‘substantial financial penalty’, the exact amount of which is yet to be determined.
“While the Company cannot say at this stage what the consequences of the investigation will be, it is likely that they will include a substantial financial penalty which is yet to be determined,” Entain’s statement reads.
In the face of the ongoing inquiry, Entain remains cooperative with the authorities and has been proactive in refining its internal governance. A comprehensive review of anti-bribery policies and procedures has been conducted, leading to substantial action to strengthen the group’s wider compliance programme and associated controls.
Currently, Entain’s focus lies on concluding the DPA negotiations with the CPS, which continue to progress.The Board has expressed satisfaction with the direction and status of the talks with the CPS, as it looks forward to “pursuing an orderly conclusion to this matter”.
Barry Gibson, Chairman of Entain issued the following statement: “We are keen to achieve a resolution to what is a historical issue relating principally to a business that was sold by the Group nearly six years ago. Entain has undergone extraordinary transformation since then and has taken decisive action to be a best-in-class, responsible operator with outstanding corporate governance.
“The Board and leadership teams have been overhauled, 100% of our revenue is now from regulated or regulating markets, and our business model, strategy and culture have been reviewed, analysed, and stress-tested. We will continue to work closely with both the CPS and HMRC to ensure that this matter can be concluded as soon as is practical.”
