Ladbrokes and Coral owner Entain sets aside £585 million to settle HMRC bribery investigation

Entain has set aside £585 million to cover a potential penalty following an HMRC investigation into its former business in Turkey which was sold in 2017.

The owner of Ladbrokes and Coral is in deferred prosecution agreement (DPA) negotiations with the Crown Prosecution Service (CPS) over the case and said it is likely to be able to agree a resolution of the investigation, subject to judicial approval.

That approval will be sought in the fourth quarter of this year, with the settlement paid over a four-year period in relation to alleged offences under Section 7 of the Bribery Act 2010.

The HMRC investigation first came to light in November 2019 with the authorities asking for information regarding the Turkish-facing business held between 2011 and 2017 by what was then called GVC Holdings.

Entain chairman Barry Gibson said: "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 cooperation. 

Gibson said that following an overhaul of the company's business model, strategy and culture in recent years, "the Entain of today bears no resemblance to the GVC of yesterday, which had a different management team, a different strategy and – to be blunt – different standards".

Entain said in May that it was facing a "substantial penalty" as a result of the HMRC investigation.

The HMRC had widened its investigation in 2020, shortly after the departure of the then chief executive and well-known racehorse owner Kenny Alexander from GVC.

The ongoing investigation led to the Gambling Commission last month effectively blocking an attempt by a group of investors including Alexander and other former GVC figures taking over the running of William Hill owner 888.

Entain: owners of Ladbrokes and CoralCredit: Alan Crowhurst

The news came as Entain published its results for the first six months of the year on Thursday morning.

Total group net gaming revenue (NGR) was up 19 per cent, while the company achieved a record level of online active customers, up 23 per cent year-on-year.

Group core earnings of £499 million were six per cent higher than the equivalent period last year and the company said it was expecting the figure for the full year to breach the £1 billion mark for the first time.

Tighter affordability measures put in place in anticipation of the government's gambling white paper meant that UK online NGR was down two per cent.

However, the company's retail operations performed better than expected, with NGR up 12 per cent.

In the UK, betting shop NGR was five per cent ahead of 2022 with growth in both sports and gaming. 

"Pleasingly we are also seeing growth in our OTC [over-the-counter] offering during the first half of 2023," the company added.

Chief executive Jette Nygaard-Andersen said: “This has been another period of strong performance for Entain as we make clear strides towards delivering our strategic ambitions. 

"In particular, we are making excellent progress in broadening our customer base and deepening our audience engagement, as evidenced by the record number of active online customers on our platform."

The company's US joint venture BetMGM delivered NGR of $944m (approx £740m), up 55 per cent year-on-year, while earnings moved into positive territory in the second quarter. Entain said it had an 18 per cent market share in the US states where it operates, excluding New York.

Nygaard-Andersen added: "BetMGM continues to show momentum and backed by our technology and capabilities we are excited by the improvements we are delivering for customers in the US. 

"I’d like to thank all my Entain colleagues around the world for their hard work and dedication in delivering this performance. This clear focus on driving sustainable long term growth combined with our global operating capabilities underpins our confidence in our prospects for 2023 and beyond and delivering value for our shareholders."

Entain's update was described as a "mixed bag" by analyst David Brohan of stockbrokers Goodbody, while the company's share price finished 1.62 per cent up at 1,380p on Thursday.

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