Entain Shareholders Sue Over $760M Turkish Bribery Fine
A group of investors in UK-based online gambling giant Entain (OTC: GMVHF) have filed a class-action lawsuit that seeks compensation for damage done to the company’s share price by a bribery probe into its former Turkish operations.
Entain, formerly known as GVC Holdings, was accused by UK tax agency HMRC of failing to have protocols in force to stop employees at its rogue Turkish arm engaging in bribery and stealing from the company. (Image: Shutterstock)
The complaint, filed Wednesday in London’s High Court by 20 institutional shareholders, demands $150 million in damages. It claims that Entain failed to properly inform investors of an investigation by the UK tax agency, HMRC, into bribery and corruption at the Turkish subsidiary, Headlong.
Ultimately, Entain would pay one of the biggest fines in UK corporate history, £600 million (US$760 million) to resolve the case. Shares in the company have almost halved since May 2023 when it warned shareholders of the impending penalty.
Shady Networks
Entain, then known as GVC Holdings, offloaded Headlong for free in December 2017 ahead of its proposed takeover of British legacy betting group Ladbrokes-Coral.
Online gambling is illegal in Turkey, and the company wanted to rid itself of black-market ops that might give regulators a reason to nix the Ladbrokes deal.
But once upon a time, Headlong accounted for a third of Entain’s revenues, and the company employed sketchy cash-collection networks and payment processors to hide transactions from Turkish financial institutions. It also, allegedly, bribed Turkish officials to turn a blind eye.
HMRC accused Entain of failing to stop Headlong employees from engaging in bribery. The unit was so poorly overseen that some of its employees were defrauding the parent company by siphoning off money.
Entain, which now owns half of BetMGM, could have been prosecuted under the UK Bribery Act but prosecutors ultimately decided against this because it could have resulted in the company losing licenses across the world, potentially putting thousands of jobs at risk.
Internal Unrest
Should the case proceed to trial, a judge will need to determine the degree to which the Turkish investigation caused Entain’s stock market downturn. There have been many other factors that have damaged its share price over the past few years, including a series of misfiring acquisitions.
Activist investors have lately taken an increasingly prominent position in the group and have voiced concerns about its strategic direction. This may have led to the resignation of then-CEO Jeannette Nygaard-Anderson in December 2023 amid rumors of internal unrest.
Andrew Williams, a partner at Fox Williams, the law firm that filed the complaint, said he hoped the lawsuit would “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.”
The post Entain Shareholders Sue Over $760M Turkish Bribery Fine appeared first on Casino.org.
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