Published on: December 17, 2024, 06:26h.
Last updated on: December 17, 2024, 06:26h.
Shares in British online gambling giant Entain [LON: ENT] dropped nearly seven percentage on Monday following reports that Australia’s financial intelligence agency, AUSTRAC, filed a lawsuit against the company for breaching anti-money laundering (AML) regulations.
The parent company of Ladbrokes, which owns a 50% stake in BetMGM in the U.S., is alleged to have accepted AU$152 million (US$96 million) in wagers from 17 customers with “suspicious criminal backgrounds and affiliations,” according to a filing from AUSTRAC on Monday. AUSTRAC claims that Entain was aware of the risks involved.
Despite being aware of the high risks of money laundering and terrorism financing, Entain decided to maintain business relationships with these customers, including those with suspected criminal backgrounds and affiliations,” AUSTRAC’s filing stated.
“Failure to monitor these customers exposed Entain to the risk of being exploited by criminals and the possibility that proceeds of crime were being used for illicit activities,” it further added.
‘Potential Impact’
In a statement released on the London Stock Exchange on Monday, Entain mentioned that it had fully cooperated with AUSTRAC during its investigation and had implemented “enhancements” to its AML procedures. However, the company acknowledged that the impending legal actions “might result in a significant penalty being imposed.”
This marks the first instance of AUSTRAC initiating civil proceedings against an online betting operator. Nevertheless, the agency previously fined Crown Resorts, a brick-and-mortar casino operator, AU$450 million (US$285 million) for historical breaches of AML and counterterrorism financing laws.
Having ‘money laundering’ associated with a company is never wanted, and that’s why the news regarding Entain is potentially harmful,” commented Russ Mould, investment director at AJ Bell.
“A crackdown in Australia has led to other operators paying significant fines, and Entain is now anxiously awaiting to see the impact on its financial position and reputation due to any final judgment,” he added.
“This issue could linger around the business for some time as legal proceedings in Australia’s federal court could take a considerable time to conclude,” he mentioned.
Previous Penalties
Last year, Entain was fined £585 million (US$743 million) by HM Revenue & Customs, the UK tax authority. The penalty was related to alleged bribery at its former operations in Turkey.
A year before that, the company was fined £17 million (US$22 million) by the UK Gambling Commission for failures related to social responsibility and AML practices.
“We are dedicated to ensuring that financial crimes are kept out of the gambling industry and are committed to upholding a well-regulated and compliant sector for our customers, stakeholders, and the broader community,” stated Entain chairman Gavin Isaacs in a press release on Monday.