ENTAINS response to AUSTRAC 31 March 2025 regarding AML issues.

[Kit Walker]

Entain share dipped to $5.01 overnight a. 8.44% drop and over the past five days are down 17.1%. Last month 31.15% - 7.26 - 501.

At 501 that is a great price to buy. They may have done a few things wrong of late but that share price has to rise over the next few weeks.

At the current price It wouldn't come as any surprise to see a takeover proposal getting announced. MGM Resorts might be one Company considering it having previously made an offer. 

[Chief Stipe]

9 minutes ago, Kit Walker said:

MGM Resorts might be one Company considering it having previously made an offer. 

Yeah well MGM Resorts share prices is down 34% in the last 6 months.  The share price will be under more pressure if the USA tips into a recession.

[westbrew]

Kit i am 100% with the submission you have put up, however the racing industry has very close ties to the Government, and they are still glowing with the 200m that Entain threw at them and add in the other 100m they are promised over this geo block shit and the punter has no show here in NZ. Like it or not NZTR and the big breeders  don't give a toss about punters, and they are driving this legislation on behalf of Entain.  

[Chief Stipe]

24 minutes ago, westbrew said:

the other 100m they are promised over this geo block shit

Well AUSTRAC in their statement of claim make a case for ENTAIN not having done enough Geo-blocking.

[Murray Fish]

47 minutes ago, westbrew said:

Like it or not NZTR and the big breeders  don't give a toss about punters, and they are driving this legislation on behalf of Entain

@TAB For Ever what do your mate$ think about that sort of thing....

[Chief Stipe]

It's interesting how some in this industry are quick to promote a doom and gloom headline or rather a perception of one.

The perception is that ENTAIN are going to take a HUGE financial hit from the AUSTRAC Anti-Money Laundering charges.  Aka @JJ Flash

However if you read the 600+ pages of the AUSTRAC Statement of Claim against ENTAIN and then compare to other successful prosecutions there is a strong case to argue that ENTAIN will get either:

1.  A statutory enforced requirement to work with AUSTRAC to achieve compliance (ENTAIN had already agreed to pursue that course); and/or 

2.  A fine.  The quantum of that fine will be comparable to other fines that AUSTRAC have successfully prosecuted in similar cases.

There is a precedent for option 1 and that is the Sportsbet prosecution. 

In terms of option 2 a fine.  The degree of non-compliance is not close to the level of WESTPAC's which incurred a $1.3billion fine.  So it can be expected to be less.

Skycity Adelaide incurred a fine of $67 million.  Star Casino received a fine of $450 million.  Arguably the ENTAIN case lies closer to SkyCity than Star.

Star was allegedly turning over $70m a week with high risk customers which is $11.9 billion a year.  There were identified 117 high risk customers with one being given $167m gambling credit!!!  

By comparison AUSTRAC has identified 17 high risk customers who spent $152 million with ENTAIN.

In another case Crown Casinos was fined $450 million - just one of their high risk customers had a turnover more than the entire NZTAB!!

Other mitigating factors in ENTAIN's favour is that some of the non-compliance was "purchased" in that it relates to activity done by companies purchased by ENTAIN before they took over.  ENTAIN have also been cooperating fully.

ENTAIN has a market capitalisation of $8 billion and since the AUSTRAC case was lodged has seen no change in share price i.e. the market does not perceive a high risk from the current litigation.

[Chief Stipe]

For @JJ Flash and others benefit:

Timeline 

End of June 2025 - ENTAIN is expected to have completed the planned improvements to its AML and CTF systems.  Which were notified to AUSTRAC.

Before 4 August 2025 - AUSTRAC and ENTAIN are required to attend mediation.

By 12 September 2025 - if mediation does not resolve the matter ENTAIN is required to file its defence to the Statement of Claim.

After 12 September 2025 - a hearing date will be set which could be many months in the future and of course a settlement could be reached at any point up to and before that hearing is concluded.

There is an advantage to waiting until the system upgrades have been completed and spending the available time to build a defence in case the mediation talks reach a deadlock.  There is also the case in progress where Star Casino are pushing back against their fine seeking relief to avert bankruptcy.  

That said the precedents mentioned in the previous post are good guidelines to what penalty may be agreed.  It isn't inconceivable that ENTAIN show that they have made significant steps to address AML issues in their upgrade and that they agree with AUSTRAC to do more and avoid a fine.

[Chief Stipe]

Anyone who thinks that these types of cases are settled quickly would be naive.

For a start there are lawyers involved on both sides and AUSTRAC has a nice little business running with a lot of lawyers employed on success bonuses.  

In cases like this ENTAIN has a fiduciary duty to its shareholders to obtain the best deal it can.  That isn't a speedy process where you pitch up with an open chequebook and pay for it to go away.

As any one who has read the 600+ pages of the Statement of Claim would attest there are claims made in it that are weak and others that are strong.  ENTAIN will be getting their ducks lined up before entering into full on mediation.  That part of the process is relatively inexpensive compared to days of sitting in a room arguing clause by clause.

There is a fiduciary and a legal obligation to not roll over for both parties.  The outcome will be another precedent and not getting the best deal now could bite you later if another issue arises.

My reading of the SOC and the precedents there is a decent case for a settlement where AUSTRAC take an active monitoring role and maybe a comparatively small fine.

AUSTRAC have been knocking off the easy kills and going forward it is going to be harder to find cases to pursue as financial institutions get their systems compliant.  The ENTAIN case based on the SOC isn't in the same league as preceding cases.

[Gammalite]

On 4/2/2025 at 8:18 AM, Chief Stipe said:

Acknowledgement of AUSTRAC's Statement of Claim

31 March 2025

Entain plc, the global sports betting and gaming group, acknowledges that the Australian Transaction Reports and Analysis Centre ("AUSTRAC"), has today published its Statement of Claim as part of its civil penalty proceedings in the Federal Court of Australia against Entain Group Pty Ltd, the Group’s subsidiary in Australia (“Entain Australia”).

As outlined on 16 December 2024, (https://www.entaingroup.com/news-insights/latest-news/2024/acknowledgement-of-austracs-commencement-of-civil-penalty-proceedings/), Entain notes the allegations made in relation to Entain Australia and takes them extremely seriously.

The Statement of Claim published today will take some time to review and any alleged contraventions will be carefully considered.

Entain has co-operated fully with AUSTRAC throughout its investigation, and in December 2022 commenced a programme of further enhancements to its anti-money laundering and counter-terrorist financing ("AML and CTF") systems and processes.

Stella David, Interim Chief Executive of Entain, commented:

“We are taking these allegations extremely seriously and continue to fully co-operate with AUSTRAC.

“We also remain focused on continuing to enhance Entain Australia's AML and CTF compliance arrangements. We expect these enhancements to be fully implemented by June 2025, in line with the plan communicated to AUSTRAC.

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

 

Enquiries:

Media - Entain plc

media@entaingroup.com

Pretty Generic Chief.

Any company charged with something are going to show they are 'Co-operating ' with authorities.

AND that they will be 'Changing things to be compliant' 

Expect nothing less from any Company.

The Fact is that Laws have been broken and Penalties usually ensue thereafter.

Maybe they will try the 'Star Entertainment ' route of processing the 'Former' many resigned executives and directors One by One. ?  seems the way they are doing it slowly with the Star Case at Federal court anyway. 

[Chief Stipe]

4 minutes ago, Gammalite said:

The Fact is that Laws have been broken and Penalties usually ensue thereafter.

 

You miss the point the level of non-compliance is nowhere near other cases.  As I keep repeating it is more akin to the Sportsbet case (arguably not as bad as them) where no fine was incurred.  Westpac bank was fined AUD$1.3 billion but there non-compliance involved billions of dollars NOT $157m.

[curious]

14 minutes ago, Gammalite said:

Pretty Generic Chief.

Any company charged with something are going to show they are 'Co-operating ' with authorities.

AND that they will be 'Changing things to be compliant' 

Expect nothing less from any Company.

The Fact is that Laws have been broken and Penalties usually ensue thereafter.

Maybe they will try the 'Star Entertainment ' route of processing the 'Former' many resigned executives and directors One by One. ?  seems the way they are doing it slowly with the Star Case at Federal court anyway. 

The matter was to be resolved beforehand or go to mediation by August 4 and if that failed they had till September 12 to file a response to the federal court. As far as I'm aware, no outcomes have been reported yet by either party. Do you know something that the rest of us don't?

[Gammalite]

19 minutes ago, curious said:

The matter was to be resolved beforehand or go to mediation by August 4 and if that failed they had till September 12 to file a response to the federal court. As far as I'm aware, no outcomes have been reported yet by either party. Do you know something that the rest of us don't?

Wouldn't have a clue what you know and what you don't. just discussing an important topic. 

I'm just saying Federal Court Proceedings are a serious Offence . and you and Chief can downplay it all you like. But the Fact remains Several Executives and Directors, like my friend Dean Shannon who was the NZ -Aus CEO have had to leave their positions. I find that quite serious. 

The charges are quite serious and 'STAR Entertainment ' in Australia faced the same charges , Are still going through Federal court proceedings from 2022 , and they are Struggling Big Time . ( as I highlighted on a harness thread today) 

So If ENTAIN can 'mediate' their way out of it , good luck to their lawyers. Dean Shannon was out the door on June 30th this year so don't think the Mediation going 'that great ' so far . (in our NZ Aus area)  

Heres the AML report. 

On 16 December 2024, AUSTRAC imposed civil penalty proceedings on Entain Group Pty Ltd,  which operates online betting sites including Ladbrokes, Neds and other online betting brands.

The proceedings allege Entain of serious and systematic non-compliance with Australia’s AML/CTF laws.

Entain Group – A Global Gambling and Gaming Leader

Entain plc has a headquarter in the UK, an FTSE 100 constituent, and is the world’s largest gaming group and sports betting company. This group also includes technology and expands its services to third-party customers on a B2B basis & B2C operations.

Entain provides technological capabilities, infrastructure, games, and products developed by in-house gaming studios to support BetMGM. It’s a famous player in the U.S. sports iGaming & betting market.

Entain is the global operator of regulated markets and has an online and physical presence in approximately 30 territories. Not to forget, it’s a member of the Dow Jones Sustainability Index (DJSI) and FTSE4Good Index and has an AA rating from MSCI.

4 Reasons Why Entain Group is in Red Light 

AUSTRAC’s allegation against the Entain Group is based on the following AML/CTF failures:

1. Entains’s board of senior management could not keep appropriate oversight of its AML/CTF program, which in turn interfered with the ability to identify money laundering-related exploitation of their betting sites.
2. Entain operates 24/7 via websites and apps, which are already vulnerable to exploitation. It further worsened when unknown people, including third-party providers, were able to access and use Entain’s platform.
3. Even worse? Third parties could accept cash and other deposits on behalf of Entain to be credited into betting accounts in ways that fade out the proceeds of the crime.
4. The company did not have appropriate measures in place to confirm the identity of customers making deposits, nor the measure to confirm the source of the money.
5. Entain failed to conduct a proper check on 17 high-risk individuals and was indifferent to the fact that their online betting sites are being exploited by criminals to spend the proceeds of serious crimes.

Note: AUSTRAC also mentioned that “ This includes allegations that Entain deliberately obscured the identity of some high-risk customers, on its own systems, through the use of pseudonyms to “protect their privacy”.

Shares of Entain dropped by 5.5% in early trading, which coincided with the existing crackdown by Australian authorities on the gambling sector.

In response to alleged AML/CFT failures highlighted by AUSTRAC, Entertain’s CEO Gavin Issacs warned investors of a potentially hefty penalty from legal proceedings. 

Violations can result in fines of up to A$22.2 million ($14.14 million) per infraction under Australia’s

[curious]

That's over 6 months ago! A lot has happened since then.

[Chief Stipe]

42 minutes ago, Gammalite said:

The charges are quite serious and 'STAR Entertainment ' in Australia faced the same charges , Are still going through Federal court proceedings from 2022 , and they are Struggling Big Time . ( as I highlighted on a harness thread today) 

But you keep missing the point @Gammalite

Star Entertainment were done for their Casino operation ONE individual turned over more than AUD$2 billion in taxable income.  There were others as well THAT'S why they were fined $400m.

The illegal turnover was AUD$70 million EVERY week.

ENTAIN are not in that league.

You can quote all the hack journalists all you wish but the facts are in black and white in the AUSTRAC Statement of Claim.  

[Gammalite]

24 minutes ago, Chief Stipe said:

Star Entertainment were done for their Casino operation ONE individual turned over more than AUD$2 billion in taxable income.  There were others as well THAT'S why they were fined $400m.

The illegal turnover was AUD$70 million EVERY week.

That is a lot of money. I think money laundering is an extremely bad offence. It just helps organized crime in a lot of sectors that causes a Lot of Public suffering . the Tabacco War is getting Really Bad in Aus. They're starting to kill each other now for example. is very sad. 

But a Federal court is a Federal court. 

The bloke that Rob's a bank and gets away with $1000 💰. doesn't he get sentence that is the same as the bloke who got caught fleecing the bank of $100,000 ? 💰💰💰  can't see why you think Entain facilitating a few is ok and Star quite a few more , but essentially doing the same thing is so different and not note-worthy. . 

Personally the way they are processing the ELEVEN executives and Directors who were dismissed from 'Star' , will be the same as what happens to the poor smucks at the ENtain set-up who lost their positions , when the going gets tough. They try to deflect blame onto the ' few' .

Hope they catch the 'right Few' is all you can do I spose.  plenty of Accomplices involved lol 😆💰

[Chief Stipe]

2 hours ago, Gammalite said:

But a Federal court is a Federal court. 

But it may never get to Court.

2 hours ago, Gammalite said:

The bloke that Rob's a bank and gets away with $1000 💰. doesn't he get sentence that is the same as the bloke who got caught fleecing the bank of $100,000 ? 💰💰💰  can't see why you think Entain facilitating a few is ok and Star quite a few more , but essentially doing the same thing is so different and not note-worthy. . 

Speaking of banks WestPac $1.3b fine and the Commonwealth Bank of Australia $700m fine were all taken to the Fed court by AUSTRAC for insufficient AML systems and processes.

Don't forget ENTAIN bought the Ladbrokes business and a lot of the issues listed in AUSTRAC's claim relates to the business.  ENTAIN have been working to implement new systems and processes to reduce the chance of money laundering occurring.  However it isn't a simple process.