Compensation claims issued against Entain over historical Turkish activity

Two groups of shareholders have launched separate compensation claims in the UK against Entain over allegations the operator did not fully disclose knowledge of its historical operations in Turkey, where bribery is alleged to have taken place.

The claims, which are spearheaded by securities litigant Fox Williams, were issued against the FTSE 100 firm at the start of August in the High Court of England and Wales.

Fox Williams first announced in June plans to file a group claim against Entain on behalf of institutional investors, with intentions to file the case in the Autumn 2024.

However, EGR can confirm that Entain has yet to be formally served with either of the claims.

The case relates to investors’ perceived failure on Entain’s behalf to “report honestly (or at all) to investors regarding its knowledge of (among other wrongdoing) bribery and corruption in Turkey”.

The historical allegations of bribery in Turkey relate to a former Entain (then GVC Holdings) business, Headlong Limited, which the operator owned between 2011 to 2017.

In May 2023, Entain notified the market it was likely to face a “substantial financial penalty” after entering a deferred prosecution agreement (DPA) with the Crown Prosecution Service (CPS).

That confirmation came after His Majesty’s Revenue and Customs (HMRC) launched an investigation in November 2019.

HMRC’s probe at the time concerned payment processing by a number of former third-party suppliers in Turkey.

HMRC then widened the scope of the investigation in July 2020 to include possible lawbreaking at a corporate level.

The Fox Williams case summary on its website reads: “On 31 May 2023, Entain announced that it was negotiating a DPA with the UK’s CPS [Crown Prosecution Service] in connection with bribery offences following an investigation into its Turkish operations by His Majesty’s Revenue and Customs.

“Subsequently, Entain shares suffered a fall in value.

“Fox Williams’ claim arises from Entain’s failure to report honestly (or at all) to investors regarding its knowledge of (among other wrongdoing) bribery and corruption in Turkey involving Headlong Limited (an Entain subsidiary during the period 2011 to December 2017) and in breach of section 7 of the UK Bribery Act 2010.

“The claim represents an opportunity for investors in Entain to recover compensation. We urge any eligible investors to participate on this basis.”

On 5 December, the Royal Courts of Justice approved Entain’s £585m penalty, plus £20m in charitable donations and a further £10m in costs to the CPS and HMRC, amounting to £615m in total.

Between 30 May, the day before Entain notified the market of the negotiations, through to 5 December 2023 when the DPA was approved, Entain’s shares plunged more than 40%, from 1,375p to 777p.

The tanking share price led to CEO Jette Nygaard-Andersen’s sudden departure in December, with the operator having named Games Global chair Gavin Isaacs as her replacement, effective from September. Entain’s share price today, 19 August, is 642p, down almost 35% this year.

Fox Williams’ group action claim period runs from 1 July 2011 to 31 December 2023.

An Entain spokesperson said: “Entain has been made aware that, on 1 August 2024 and 2 August 2024, two groups of shareholders issued separate claims against Entain in the High Court of England and Wales.

“We have not yet been formally served with either of the claims, so these matters are at a very early stage. Entain intends to defend any proceedings robustly.”

EGR has contacted Fox Williams for comment.