U.K.-based Entain has agreed to pay $739.2 million (£585 million) to HM Revenue & Customs (HMRC) after an extensive bribery investigation into a former subsidiary in Turkey, Yogonet reported November 27.
The parent company of gambling brands Coral and Ladbrokes recently told shareholders that it had agreed to pay the penalties. In addition it committed to donating $25.27 million (£20 million) to charity and to cover HMRC’s investigative costs with an additional $12.64 million (£10 million).
It has agreed to pay the fines over a four-year period. This agreement awaits court approval.
HMRC began the probe in 2019 to look at activities connected to a Turkish-facing firm that Entain—then branded as GVC Group—divested itself of in 2017. The investigation was eventually widened to include the practices of the entire group.
It concentrated on violations of the anti-bribery measures associated with the subsidiary.
If the settlement is approved by the court that would resolve the investigation.
Entain Chairman Barry Gibson emphasized to shareholders that the company has transformed itself since that time. And that the matter “concerns a business which was sold by a former management team six years ago.”
Gibson added, “The group has changed immeasurably since these events took place, and the DPA process has provided a reminder of the stark differences between the GVC of yesterday and the Entain of today.”
This transformation may not be fast enough to address rising discontent among shareholders and investors regarding the company. It has experienced declining sales in some of its most important markets. In its home territory, U.K. regulatory measures have eaten into profits by limiting gambling activities, causing its market valuation to fall by more than a third in 2023.
In a separate but related development, Yogonet reported that the Betting and Gaming Council (BGC), which represents the industry, has called on Chancellor Jeremy Hunt to reconsider what the industry is calling a “stealth tax” on brick-and-mortar casinos.
This appears in the Autumn Statement, a government document that talks about tax spending proposals. The Treasury proposes freezing Gaming Duty Bands so they wouldn’t increase with inflation. This would, says the industry body, create a £5 million ($6.3 million) tax increase for its brick-and-mortar casino members.
This would also, says the BGC, cost casinos £25 million ($31.5 million) over the next five years.
BGC CEO Michael Dugher declared, “Freezing Gaming Duty Bands is a stealth tax, which has the potential to slow recovery and weaken future growth. Removing it would have provided a welcome boost for the land-based casino sector at a crucial time. Instead, the decision to maintain the status quo represents a missed opportunity for companies ready and able to generate jobs and investment across the country.”
The £7.1 billion ($8.9 billion) industry employs above 10,000 people, supports 110,000 jobs, and welcomes more than 16 million guests a year. It had anticipated the freeze to be lifted, as the government had announced in March. It was hoping for that action to help it cope with rising costs due to energy, rising wages and inflation.
The effects of the Covid pandemic were also traumatic, leading to closing of some casinos and layoffs, says the BGC. It brought the number of land-based casinos in the U.K. from 160 in 2005 to 117 this year, including four closings in 2023.
While criticizing the government for the “stealth tax,” the organization is largely supportive of the White Paper proposals for reforming the Gambling Act of 2005. The White Paper recommended 60 areas for the Commission to consult upon.
Dugher warned that the reforms should not be so drastic as to drive “customers to the unsafe, unregulated gambling black market,” which has been growing recently. He also said, “It seems short-sighted to maintain this stealth tax while failing to make changes that will allow casinos to hire and grow. The BGC urges a re-think so Gaming Duty Bands can be moved with inflation at the next opportunity.”
The U.K. Gambling Commission (UKGC) has begun a second set of consultations that will run until February 21, 2024, iGaming Business reported on November 29.
Tim Miller, UKGC executive director of research and policy, commented, “The white paper set out that a top government priority is ensuring that gambling happens safely.” He added, “We share this commitment and today’s consultations propose how we can deliver on it. We need as many people as possible to have their say on any potential changes to the rules operators must follow.”
It will focus on five topics: 1) Socially responsible incentives, specifically bonuses and free bets, 2) Customer-specific tools to give consumers greater control, including setting deposit limits, 3) Increasing the transparency of customer funds, 4) Requiring operators to make annual contributions to Research, Prevention and Treatment (RET), 5) regulatory data.
Consultations began in July with the first ending in October, after more than 3,000 submissions. Its most controversial aspect was affordability checks, which were so controversial that a petition opposing it has so far gathered 100,000 signatures, mandating a discussion in parliament.
A third consultation sometime in 2024 will cover financial penalties and financial event key reporting.
Revising addiction figures up
Many of the reforms proposed by the White Paper are aimed at addressing the possible 1.3 million people who may have a gambling problem, Yogonet reports.
That’s a much higher number than previously thought—eight times higher, according to information released in late November by the UKGC.
The commission previously estimated that the percentage of adults who have a gambling problem was 0.3 percent. That figure was based on a phone survey often held up as proof by the industry, especially when it was lobbying MP’s, that gambling addiction was limited, the Guardian wrote.
Now the commission cites figures it calls “higher-quality,” using a different methodology. If true, that would mean about 2.5 percent of the adult population are gambling addicts. It isn’t ready to say conclusively that there are 1.3 million.
Gambling Minister Stuart Andrew (aka Under Secretary of State at the Department for Digital, Culture, Media and Sport) declared, “This new survey presents a higher quality picture of gambling participation and harm than has existed previously.”
The reason the commission is holding its fire, in part, is because of the actual definition for someone with a gambling problem. The report defines such a person according to the problem gambling severity index. The index adds up answers to questions. Questions such as: have they sold possessions to raise money to bet, or borrowed funds, or created financial problems for themselves as a result of gambling.
It notes that the new procedure that produced a higher percentage of gambling addicts was “experimental” although it fully expects to adopt it in 2024.
The industry and its critics have been debating actual percentages for years. If the government now adopts a methodology that says there are eight times as many people with gambling problems than before, it will likely lead to redoubled efforts to address those numbers.
MP Carolyn Harris, who chairs a group of parliamentarians looking at gambling harms, said, “I hope the industry will take note and will be as keen to use these figures as they have been to cite those that showed lower rates of addiction.”
The study surveyed 4,000 people over two months. It found that most who gamble do it to make money—and not for fun. Thirty-eight percent said they gambled for “the chance to win big money” with 21 percent saying they did it for “making money” and 16 percent saying they always gamble for fun. Twenty-five percent said they never gamble for fun.
