Entain anticipates "substantial" financial penalty from UK tax authority investigation

Sports betting and gaming giant Entain revealed on Wednesday that it is likely to face "a substantial financial penalty" as part of an investigation conducted by Her Majesty's Revenue and Customs (HMRC), the tax authority in the United Kingdom.

The probe focuses on various issues, including potential misconduct involving former third-party suppliers. Entain, formerly known as GVC Holdings, stated that it is currently engaged in deferred prosecution agreement (DPA) negotiations with the Crown Prosecution Service (CPS) and is actively working towards resolving the matter.

"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," said Entain Chairman Barry Gibson in a separate statement.

Entain, which owns popular betting brands including Ladbrokes and Coral, has undergone significant changes in recent years. The company has revamped its board and leadership teams and transformed its business model to focus exclusively on regulated markets.

The ongoing investigation includes a review of Entain's former Turkish-facing business, and the company admitted that historical misconduct involving former third-party suppliers and ex-employees of the group may have occurred.

The company also emphasized its commitment to strengthening its compliance program and controls, undertaking a comprehensive review of anti-bribery policies and procedures since the investigation began.

While the ultimate outcome of the investigation remains uncertain, it is highly likely that Entain will face a substantial financial penalty, the exact amount of which has yet to be determined. The company declined to provide an estimate of the size of the penalty at this stage. 

Despite the ongoing investigation, Entain's board expressed satisfaction with the progress made thus far and anticipates "an orderly conclusion to the matter." The company will continue to provide updates as the investigation progresses, it noted in its statement.

Problematic practices in the UK multi-billion gambling industry have forced the Gambling Commission to impose several large fines in recent years. Entain was fined 17 million pounds ($21.5 million) in 2022.