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Niall Hearty

Partner, Rahman Ravelli

Quotation Marks
"Compliance with global anti-money laundering regulations is crucial for gambling companies to prevent illicit financial activities."

Legal responsibilities of gambling companies

Legal responsibilities of gambling companies


Niall Hearty explores gaming company Entain's legal challenges amid allegations of bribery and corruption.

Gambling giant Entain, which owns Ladbrokes and Coral bookmakers, recently announced that it is expecting a substantial financial penalty due to a UK investigation into alleged bribery in Turkey.

The company stated in a market filing that it has started negotiating a deferred prosecution agreement (DPA) with UK prosecutors to settle an HM Revenue and Customs (HMRC) investigation into suspected failures to prevent bribery and other wrongdoing. It has said that the allegations relate to what it calls a ‘Turkish-facing’ online betting business that it sold six years ago.

Entain was notified four years ago about the HMRC investigation into historic third-party suppliers, which reportedly relates to processing of payments for online betting and gaming in Turkey. Three years ago, HMRC expanded the probe to include potential corporate offending.


In making its announcement, Entain acknowledged that “historical misconduct involving former third party suppliers and former employees’’ may have occurred. It added that its board was “content” with how negotiations are proceeding with the Crown Prosecution Service (CPS).

Significantly, the CPS has yet to resolve an investigation through the use of a DPA, whereas the Serious Fraud Office has concluded a dozen since they became available to the two agencies nine years ago. If the CPS and Entain do conclude one, it could prove to be a very important development as far as the DPA landscape is concerned. It would be a notable precedent and may well represent a sea change in how the CPS deals with corporate wrongdoing.

But regardless of whether Entain does gain the rather undesirable distinction of becoming the first company to secure a DPA with the CPS, it faces a number of challenges. The first – and arguably the most pressing – is the need to manage stock price and stability in the face of what appear to be very damaging allegations. The second is to see through the negotiations in order to secure a DPA. Such an outcome is far from ideal.

Yet given the nature of the allegations, concluding a DPA could prove to be less damaging than the company facing prosecution; although it should not be forgotten that any DPA would not prevent individuals being prosecuted. To secure the DPA, Entain will have to both cooperate with the CPS and be able to demonstrate that it has a genuine desire to put right the wrongs that have led to it being investigated.


But Entain’s situation is about more than one company. Gaming companies have come under increasingly intense scrutiny – and have to be able to demonstrate that they are operating in full accordance with the law.

To give some recent examples, the end of May saw 32 Red Limited and Platinum Gaming Limited fined a total of £7.1 million for failing to protect customers from gambling risks. Last year saw Entain fined £17 million for social responsibility and anti-money laundering failures.

No gambling company can afford to treat money laundering as an issue on the periphery of its operations. Gambling companies, just like all other firms that provide financial services, are subject to the Proceeds of Crime Act (POCA). To put it in the simplest of terms, this means that they are regulated, must comply with the directives and regulations of the global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF), and need to be 100 per cent sure that they are doing everything possible to prevent their business being used by those looking to launder the proceeds of crime.

This does not merely mean gambling companies having a general idea about what money laundering is or a well-meaning intention to recognise it when they see it. Regulated companies have to devise and run carefully-planned programmes to determine whether any money coming into their business is the proceeds of crime. They must also ensure they have procedures in place so that any money laundering suspicions are reported to both the appropriate member of staff and the relevant authorities as soon as possible.


Entain’s current problems serve as a stern reminder to the gaming industry that any failures on their part are likely to result in regulatory intervention or law enforcement actions. It is worth emphasising that Entain says its current legal problems are due to the activities of a business it sold a number of years ago.

It is stating the obvious to say that companies can be as liable for wrongdoing committed in the past as in the present. But it underlines the need for companies to be conducting regular, comprehensive reviews of their bribery policies and procedures to ensure they are legally compliant and have proper controls in place.

The UK’s Bribery Act is a far-reaching piece of legislation. Since it came into effect on 1 July 2011, it has covered all companies of all sizes, either based in, or with a close connection to, the UK. Any such company can be prosecuted in the UK, under the Act, for bribery that was perpetrated on its behalf anywhere in the world by its staff, an intermediary, third party or even a trading partner acting on its behalf.

With maximum punishments including unlimited fines and up to ten years’ imprisonment, it is understandable that Entain (and any other company facing similar allegations) would prefer to go down the DPA route rather than face the harmful financial and reputational repercussions of a prosecution. Entain cannot change what happened six years ago. But by showing commitment to putting right the wrongs now it may at least be viewed by the authorities as wanting to make the necessary changes – which could be of great value in securing that all-important DPA.

Wider considerations

The responsibilities on Entain and all other gambling companies go beyond ensuring they are not implicated in bribery and money laundering.

All gambling companies are regulated by the Gambling Commission – a body whose primary reason for existing is to ensure that gambling is fair and safe. It does this by licensing both gambling businesses and people to work in the gambling industry, by setting out Licence Conditions and Codes of Practice (LCCP) and providing advice and guidance. Most notably, from a legal perspective, the Commission carries out compliance activities to ensure companies are meeting their legal obligations – and if they are not, they will commence enforcement action and, when necessary, prosecutions.

The Commission’s functions are set out in the Gambling Act 2005, as amended by the Gambling (Licensing and Advertising) Act 2014. It is worth pointing out that one of the main objectives of its current three-year strategy is keeping crime out of gambling. In the strategy, the Commission makes clear its determination to work with other agencies, to “target our activities to contribute to a reduction in crime associated with gambling” and to “continue to hold gambling licence holders to account to ensure they are meeting their responsibilities to keep crime out of gambling.”

Entain currently faces the challenge of convincing the powers that be that it is doing all it can to keep crime out of its activities in the gambling sector. But everyone else in the sector – even those not facing the prospect of prosecution or severe regulatory action – has to ensure that they are also meeting that obligation.

Niall Hearty is a Partner at Rahman Ravelli