Ladbrokes and Coral owner Entain has put aside £585 million to settle an HMRC bribery probe into the Turkish business it sold in 2017.
The betting giant is in negotiations over a deferred prosecution agreement, and while it is not final, it says it expects to have to pay more than half a billion pounds.
Entain shares fell by 2.2% to 1,328p today. They plummeted two months ago when it revealed it was in talks over a settlement, but the figure announced today is larger than the £300 million or so that City analysts had predicted.
It said: “While the full terms of a DPA are subject to judicial approval, the company has a sufficient degree of confidence to take a provision of £585 million against a potential settlement, which would be paid over a four-year period in relation to alleged offences under Section 7 of the Bribery Act 2010.
“The company currently anticipates judicial approval will be sought during Q4 2023.”
The amount of money put aside assumes Entain “will receive full credit” for cooperating with the investigation. This means that, had it not cooperated, it may have had to pay even more.
Entain sold its business in Turkey, where online betting is not regulated, in 2017 in order to help secure clearance to buy Ladbrokes and Coral. However, questions emerged about the sale, with a Times report at the time suggesting it had been sold to a friend of then-CEO Kenny Alexander.
Entain chair Barry Gibson said the events in question were well in the past and the business today - which changed its name to Entain from GVC when Alexander left in 2020 - is nothing like the one it was in 2017.
“We are pleased to be making good progress towards drawing a line under this historical issue, which relates to a business that was sold by a former management team of the group nearly six years ago.
“We have been working closely with the CPS throughout this process, and they have recognised our extensive co-operation. Following a complete overhaul of our business model, strategy and culture in the last few years, the Entain of today bears no resemblance to the GVC of yesterday.”
The Ladbrokes owner said it took a “comprehensive review” of its business when the investigation first emerged. When it changed its name to Entain, it also revealed it would exit all so-called “grey markets” where the legal status of online gambling is ill-defined. It has currently left all but one.
The scandal at Entain threatened to spill over to rival 888, which owns William Hill, this summer, when a group led by Alexander bought up a stake in 888. The group hoped to make Alexander its CEO, but the gambling watchdog intervened by launching a review into the company’s licence, citing the HMRC investigation. 888 said it felt its licence would be revoked if Alexander was put in charge and cancelled talks about making him CEO.
Entain also announced its results today. Profit rocketed by 89% to £287.6 million, thanks in part to a better performance for its American joint venture BetMGM. In the UK, online revenue was down 2%. The company said that revenue would have been up by 7% if not for new safer gambling measures annnounced by the Government this spring.
