One of the largest gambling operators in the UK has confirmed that it expects a local tax authority to slap it with a massive monetary penalty over historic corporate misconduct that took place at its former online betting arm in Turkey.
Yesterday, Entain officially revealed that a probe into the company’s operations that the HM Revenue and Customs (HMRC) has been working on since 2019 has been redirected to the country’s public prosecutor, the Crown Prosecution Service. Currently, the British gambling giant is negotiating a deferred prosecution agreement with local authorities, with the settlement expected to result in a hefty financial penalty.
Both the HMRC and the Crown Prosecution Service (CPS) confirmed they were currently negotiating a deferred prosecution agreement with Entain but refused to make more comments on the matter.
According to Morgan Stanley’s analysts, the cash flow from the former Turkish online gambling business in the period of ownership from 2011 to 2017, when Entain used to operate under the name GVC Holdings, was estimated at approximately £230 million. The investment bank and financial services company’s experts also noted that the monetary penalty may be lower because it may not be associated with all historic activity in Turkey.
Analysts at Morgan Stanley projected that the fact that Entain fully cooperated with investigators and UK authorities could result in a discount of up to one-third of the possible monetary penalty.
HMRC Investigates “Potential Corporate Offending” at Entain’s Former Sportingbet Business
As revealed by Entain, the HM Revenue and Customs investigation is linked to “potential corporate offending” at Sportingbet, a former Turkish subsidiary of the gambling giant. Most of the law breaches fall under section 7 of the country’s Bribery Act, which relates to cases where a company has not prevented an individual from offering a bribe to another individual or entity on their behalf.
At first, the probe carried out by the HMRC focused on wrongdoing by some third-party suppliers to the Turkish unit of Entain over payment processing. The investigation was, however, expanded to a greater scale to include some entities and former employees of the subsidiary.
In 2017, Entain decided to dispose of its Turkish online business ahead of the then-planned £4-billion acquisition of Ladbrokes, which resulted in the establishment of the largest high-street bookmaker in the UK.
The gambling giant’s chair, Barry Gibson, now commented that Entain was willing to achieve a resolution of what appeared as a historical issue for the group. He further added that the last few years have seen the company take decisive action to improve its corporate governance at all levels. Mr Gibson explained that a major overhaul had been carried out in the board and leadership teams, and noted that the entire revenue of the company was currently generated from regulating or regulated markets. Entain’s strategy, business model and corporate culture had also been reviewed and altered to suit the new vision of the company.
The sale of the then-GVC Holdings’ Turkish online gambling arm caused controversy at the time when it was announced after information that then-CEO Kenny Alexander had sold Sportingbet to Ropso Malta, an IT service provider, emerged. However, considering the fact that the violations are historic, market experts do not expect to see the UK gambling licence of Entain affected in any way by the investigation. So far, Entain and GVC Holdings have collectively faced total fines of £22.9 million by the UK Gambling Commission for various anti-money laundering and customer protection failures.
- Author
Olivia Cole
