Legal responsibilities of gambling companies

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.

Negotiations

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.

Scrutiny

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.