Entain faces new pressure from investors over Turkey market

After a settlement with the HM Revenue & Customs, a change in leadership and a revolt of activist investors all in recent months, Entain’s long list of ordeals may not be coming to an end any time soon, as a group of investors is now ganging up on the Ladbrokes and Coral owner, and is gearing up to sue the company for $128m (£100m) this autumn, Law360 reported.

New brush with irate investors puts Entain in a bind

The plaintiffs are alleging that Entain had failed to notify them about the problems the company faced with the HM Revenue & Customs over the company’s previous identity, GVC Holdings, in Turkey.

According to the lawsuit, not all information regarding the bribery and corruption allegations in Turkey had been disclosed in good faith to investors. The case concerns a GVC Holdings subsidiary in the country, and the lawsuit alleges that Entain had violated Section 7 of the Bribery Act 2010, a British law.

Headlong Limited, which was the subsidiary responsible for GVC Holdings’ operations in Turkey at the time, became the reason why Entain faced regulatory pressure in the first place. Entain reached an agreement with the HMRC, acquiescing to a $738m (£585m) settlement with the regulator, and seeing the exit of her former CEO, Jette Nygaard-Anderson.

The lawsuit is filed by Fox Williams, a securities litigant, which has issued a call to action for any investor who may have held positions in Entain between July 1, 2011, and December 31, 2023, to join the suite and seek damages from the company.

Investors may have a point, as GVC first mentioned that it had faced regulatory scrutiny over the matter from the HMRC in July 2020, but the investigation itself was launched in 2019. A year later, though, the probe took a bigger dimension, and implicated the company publicly.

At the same time, GVC Holdings had been pondering a rupture with its now former identity, transforming itself as "Entain," a brand that would become known for its credo:" For the good of entertainment."

Entain will get a chance to improve transparency and governance

Yet, four years after the fact, some of the past sins of the ancestor company still come to haunt the offspring. In a statement, Fox Williams Partner Andrew Hill had this to say:

"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."

Entain finds itself in a similar position as the company is seeking compensation from BetCity’s former owners over their failure to disclose an ongoing investigation into the latter company at a time when Entain agreed to purchase the property to grow its footprint in regulated markets in Europe, and the Netherlands specifically.

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