A significant legal agreement has been reached with the gaming giant Entain plc, resulting in preliminary judicial approval from the Royal Courts of Justice, confirming the company’s in-principle agreement with the Crown Prosecution Service (CPS) to pay a hefty sum of £585.0 million. This announcement, made on 24 November, is a crucial step towards finalizing an issue that has cast a long shadow over the company’s operations, specifically concerning its former Turkish subsidiary operations.
Entain, previously operating as GVC Holdings, will formally seek final judicial approval on 5 December. The agreement involves Entain paying out not only a financial penalty but also disgorging profits, culminating in the aforementioned total. In addition, the company will make a charitable donation of £20.0 million and contribute £10.0 million towards the CPS and HMRC costs, with these payments scheduled to be made in instalments over the term of the four-year Deferred Prosecution Agreement (DPA) starting from the date of the final court approval.
The company’s share price experienced a minor dip at the market opening on the day of the initial post concerning the article, dropping 2.38% at £843.80 per share. However, as the trading day continued, shares slightly recovered to £856.20 (down just 0.95% since opening) by 15:35 UK time.
The DPA pertains to an HMRC investigation birthed from Entain’s historical Turkish business dealings, which became a matter of public concern in 2019. HMRC’s inquiry escalated the situation to seek additional information related to online betting and gaming operations from what was then GVC Holdings. The revelations came as a surprise given previous denials by GVC Holdings, where the company had rejected claims of continuing to benefit from its Turkish business following the sale of Headlong Ltd six years earlier.
Barry Gibson, Entain chair, emphasized the company’s evolution since the occurrence of these events, underlining the stark differences between the past and present features of the organization. Claiming best-in-class status as a responsible operator, Gibson reiterates the company’s commitment to regulated markets.
This monetary penalty is part of a voluntary DPA, which aims to completely settle probes into matters concerning Entain’s own business. Entain’s financial relations with its Turkish operation, Headlong Limited, which it owned from 2011 till it sold to Ropso Malta Limited in 2017, are at the core of this extensive investigation. Despite the sale, lingering reports suggested that Entain continued to benefit from Turkish operations, prompting HMRC to intensify their scrutiny, subsequently expanding their investigation to potential corporate offending under section 7 of the Bribery Act 2010.
Restructuring took center stage in 2020, following the probe’s announcement and the subsequent CEO role handover from Kenny Alexander to Shay Segev and then to Jette Nygaard-Andersen. The company transformed its operational base from the Isle of Man to the UK, rebranded itself from GVC Holdings to Entain, and emphasized its socially responsible ethos.
However, these transformative measures didn’t entirely mitigate regulatory pressures. Entain faced a staggering £17 million fine imposed by the GB Gambling Commission for severe social responsibility failures, highlighting the critical need for stringent corporate governance and compliance with gaming regulations.
Entain’s future now seems to hinge on the outcome of this settlement and its potential impact on various licenses, especially considering its valuable joint venture with MGM Resorts in the United States. Moreover, the group’s strategic Project Romer underscores an ambitious drive toward significant cost savings and a robust online EBITDA margin by the year 2028.
In the face of this agreement, Entain affirmed that the DPA relates exclusively to the company and the group’s business. Nevertheless, the ultimate implications for former executives remain uncertain, particularly as it relates to alleged offences under Section 7 of the 2010 Bribery Act, which underscores the importance of proper procedures to prevent associated persons from engaging in corrupt practices for commercial benefits.
The next development in this saga is slated for post-court announcements following the proceeding on 5 December. With the aim to put past practices and allegations firmly in the past, Entain endeavors to navigate through the complexities of corporate responsibility, stringent regulations, and the overarching aim of maintaining a transparent and accountable industry presence.
