Entain to pay nearly $730 million to settle Turkish bribery claims
Last May, global gaming giant Entain announced it would pay a hefty fine over bribery allegations related to its previous operations in Turkey. The company began preparing a fine and has now agreed to pay 585 million pounds ($729 million) to settle the case.
The case dates back to when Entain was still known as GVC and operated sports betting brand Sportingbet in Turkey from 2011 to 2017. Years later, HM Revenue and Customs (HMRC) uncovered evidence of bribery and other incidents that allowed GVC to operate in the country.
On Friday, Ladbrokes owner and BetMGM partner confirmed it had reached an agreement with HMRC and would pay the fine. In this way, the company can avoid prosecution for criminal conduct that could result in it losing its gambling license.
Türkiye’s costs bring huge losses
Entain (then GVC) left Turkey in 2017 when it sold its operations in the country (under the Headlong Limited brand) to Ropso Malta Limited. At the time, the company was Entain's preferred IT services provider in Türkiye.
The deal is expected to be worth about $178 million, assuming Ropso can achieve certain goals. However, when Entain announced its intention to acquire Ladbrokes Coral, the company decided to part with the amount.At least on paper, this was an attempt to appease regulators and quickly gain approval for the acquisition.
Shortly thereafter, in 2019, media began reporting that some people at the top of Entain still had financial ties to Ropso. They deny the accusations. But the rumors sparked an investigation by HM Revenue and Customs (HMRC).
The investigation grew larger when tax authorities uncovered evidence that some people within Entain and companies associated with the brand may have been involved in a bribery scheme. Eventually an agreement was reached between HMRC and Entain and the Crown Prosecution Service (CPS) was prepared to press charges if an agreement could not be reached.
Looking back over the past 12 years, Turkey has paid twice as much for Entain as it deserves. The company will pay more than $1 billion in lost acquisition earnings and fines before the country officially forgets about it.
In addition to the nine-figure fine, Entain may also be required to pay £20 million ($25.21 million) in charitable contributions and £10 million ($12.6 million) in costs to cover costs incurred by HMRC and CPS.
A British court will have the final say on the arbitration award when it hears the case on December 5. If nothing changes, Entain will repay the debt in regular installments over four years.
Entain becomes a suspicious target
Entain's big push last year was in the M&A area. It spent a lot of money - and even more - and acquired many companies.
Entain traded on the London Stock Exchange on August 10 for about £1,380 ($1,739). This comes shortly before shareholders approved the company’s acquisition of Polish sports betting operator STS. Things went downhill from there.
As of September 25, the company's shares were trading at £918 ($1,157). It has gone up and down over the past few months, but never seen any major changes.
Since Monday, the price has fallen to 843.16 pounds ($1,062). This means investors received a return of -35% last year.
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Source: www.casino.org
