UK online gambling powerhouse Entain is confronted with a class-action lawsuit from investors that could potentially cost it £100 million (US$118 million). 

The London-based law firm Fox Williams has announced that it is ready to initiate the lawsuit. It alleges that Entain did not inform investors about an investigation by HMRC, the UK tax authority, regarding bribery and corruption at its previous Turkish division. 

In November 2023, Entain consented to pay £600 million (US$760 million) to settle the case, marking one of the largest corporate penalties ever recorded in the UK. 

The company's shares have almost decreased by fifty percent since May 2023, when it cautioned shareholders it anticipated incurring a “significant financial penalty.” 

Fox Williams stated this week that Entain did not “report truthfully (or at all) to investors about its awareness of (among other misconduct) bribery and corruption” in its Turkish subsidiary, Headlong, from 2011 to December 2017. 

Hands Oiled 

Headlong previously represented a third of Entain’s revenues. Online gambling is prohibited in Turkey, prompting the subsidiary to utilize dubious cash-collection networks and payment processors to obscure transactions from Turkish financial authorities. It was also said to have been bribing officials in Turkey to ignore the operation. 

Entain, previously called GVC, sold Headlong for nothing in December 2017 to facilitate its acquisition of Ladbrokes-Coral, finalized in March 2018. It was apparent that its Turkish operations would not be well received by UK regulators examining the Ladbrokes agreement, nor by prospective investors. 

In July 2020, HMRC stated that it was investigating "possible corporate wrongdoing" by the Turkish branch, causing Entain’s shares to plummet by 12%. 

In the end, HMRC accused Entain of not having adequate measures to prevent Headlong employees from participating in bribery. In reality, the unit was managed so poorly that certain employees were embezzling funds. 

Corporate Misconduct 

Entain might have faced prosecution under the UK Bribery Act, but there were worries that this could lead to the loss of its licenses worldwide, endangering thousands of jobs.

"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,” Andrew Hill, a partner at Fox Williams said.

“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,” he added.

Entain stated that it had no knowledge of any legal proceedings but mentioned it would vigorously defend against any such actions.