Shares in Ladbrokes owner Entain decline in money laundering probe

Entain shares fell nearly seven percent this morning after the gaming giant was sued by Australian authorities for failing to comply with anti-money laundering regulations.

The Australian Transaction Reports and Analysis Center (Austrac) said on Monday that Entain’s Australian subsidiary did not correctly identify anti-money laundering risks in its first case against an online betting company.

According to Austrac, Entain created risks that its platform could be used by people it did not know and failed to assess 17 high-risk customers.

It said Entain “deliberately obscured the identity of some high-risk customers on its own systems through the use of pseudonyms to ‘protect their privacy’.”

The group said the outcome of the trial could be “potentially significant”. Its share price has this morning fallen by 6.75 per cent.

“A company would never have the words ‘money laundering’ anywhere near it, which is why news from gambling outfit Entain is potentially damaging,” said Russ Mould, chief investment officer at AJ Bell.

“The Ladbrokes owner is being taken to court by the Australian regulator, significantly the first time it has brought civil proceedings against an online betting company, for serious non-compliance with the country’s anti-money laundering and anti-terrorist financing laws.

“An Australian raid has seen other operators pay out significant sums in fines, and Entain faces a nervous wait to find out what damage might be done to its balance sheet and reputation in the event of an assessment.

“This issue may hang over the business for some time to come as the case in the Federal Court of Australia may take quite some time to reach a conclusion.”

Entain has struggled with a difficult trading period, weighed down by £2bn of acquisitions and a series of compliance battles, with investors in Turkey are in line for more than £100m in compensation for not disclosing a high-profile bribery case that forced them to pay HM Revenue and Customs almost £600m.

Gavin Isaacs, chief executive of Entain, said: “We note the allegations made, which we take extremely seriously.

“We have cooperated fully with AUSTRAC throughout the investigation and are implementing further improvements to Entain Australia’s AML and CTF compliance arrangements. While we still have some further improvements to make, we expect these to be implemented in accordance with the plan we communicated to AUSTRAC in 2023.

“We are committed to keeping financial crime at bay and continue to play our part in supporting a well-regulated and compliant sector for our customers, stakeholders and the wider community.”