Entain Shares Fall Due to Pending Penalty

Late in 2019, HMRC initiated an investigation into potential corporate wrongdoing involving a Turkish-facing online betting and gambling business owned by Entain

Entain Shares Fall Due to Pending Penalty 

Entain has stated that a UK investigation into suspected bribery offences by one of its former Turkish subsidiaries will likely result in a "substantial financial penalty".

This was disclosed to shareholders in a statement that confirmed it was negotiating a deferred prosecution agreement with the Crown Prosecution Service (CPS) while attempting to resolve an investigation by HMRC. Following the announcement, shares of the Isle of Man-based sports betting and gaming group fell as much as 3.3% during Wednesday morning trading, momentarily making it the largest decliner on the FTSE 100, before recovering losses.

Late in 2019, HMRC initiated an investigation into "potential corporate wrongdoing" involving a Turkish-facing online betting and gambling business owned by Entain between 2011 and 2017. The business, which also runs Gala, Foxy Bingo, and partypoker, was asked to provide the Turkish tax authority with information regarding its Turkish subsidiary.

Entain previously believed that HMRC was investigating some of its erstwhile third-party suppliers who processed payments for the company's operations in Turkey, where online gambling is illegal.

However, Britain's largest bookmaker disclosed in July 2020 that HMRC was expanding its investigation to include possible corporate wrongdoing by "one or more entities within the group."

The investigation includes but is not limited to, section seven of the Bribery Act of 2010. The applicable section of the act addresses the failure of British commercial organisations to prevent bribery wherever they conduct business. It sold its Turkish division in December 2017, shortly before spending £3.6 billion on Ladbrokes Coral.

In a statement, the company said that the HMRC investigation "includes an examination of its former Turkish-facing business and acknowledges that historical misconduct involving former third party suppliers and former employees of the group may have occurred... The organisation continues to work closely with HMRC and the CPS."

The company stated that it was impossible to predict the outcome of the investigation and that prosecution of one or more entities within the group remained a possibility, although they could defend themselves or be found guilty.

It said: “Negotiations remain ongoing and any resolution would be subject to judicial approval.”