Entain investors seeking $127 M payout over failure to disclose problems at former Turkish subsidiary

Entain could have to pay more than £100 million ($127 million) in compensation to investors over failures to update them on issues with bribery and corruption at the group’s former Turkish operation, reports The Guardian.

The planned action is led by legal firm Fox Williams and follows Entain’s agreement to pay almost £600 million ($765 million) in a deal with HM Revenue and Customs (HMRC). Finalized in December 2023, the settlement is one of the largest financial penalties ever imposed in the UK and came after an investigation into alleged bribery.

Shares in Entain, the parent company of renowned betting brands Coral and Ladbrokes, have nearly halved since the company said in May 2023 that it was likely to have to pay a substantial penalty to settle with HMRC. 

Last year in August, Entain said that it had set aside £585 million ($746 million) related to the investigation settlement. The deal was finalized in November, including a financial penalty and a “disgorgement of profits,” in which funds from illegal or wrongful acts are given up. 

Additionally, the company also agreed to make a charitable donation of £20 million ($25.5 million) and to pay a contribution of £10 million ($12.8 million) to the costs of HMRC and the Crown Prosecution Service.

HMRC originally launched an investigation in 2019 into "potential corporate offending" by a Turkish-facing online betting and gaming business that Entain owned between 2011 and 2017. The investigation also looked into the activities of third-party suppliers and former employees of the group. 

Entain, at the time known as GVC, was accused of failing to have the correct procedures in place to stop people from taking part in bribes that benefitted the business.

A year later, in July 2020, HMRC announced that it was examining potential corporate offending by Ladbrokes’ former Turkish subsidiary that caused the shares to fall 12% at the time.

A spokesperson for Entain told The Guardian: “We are currently unaware of any action of this kind against the company, and have not received an issued claim. We would defend any such action robustly.”

Andrew Hill, a partner and head of the securities litigation team at Fox Williams, told the publication: “This claim will offer institutional investors the opportunity to recover substantial losses but more importantly serve to improve transparency and governance within the UK’s gambling sector, reminding public companies that they need to take their disclosure obligations seriously.

“Hopefully this will therefore have the knock-on effect of improving corporate behavior because public companies should know that their shareholders won’t let them get away with misconduct.”