Posted on: December 17, 2024, 06:26h. 

Last updated on: December 17, 2024, 06:26h.

Shares in British online gambling giant Entain [LON: ENT] fell by almost seven percent Monday following news that Australia’s financial intelligence agency, AUSTRAC, is suing the company for violating anti-money laundering (AML) rules.

The Ladbrokes parent, which owns half of BetMGM in the U.S., is accused of accepting AU$152 million (US$96 million) in bets from 17 customers with “suspected criminal profiles and associations,” according to a notice of filing from AUSTRAC Monday. The agency claims in the notice that Entain was aware of the risks.

In spite of often being aware of the high money laundering and terrorism financing risks, Entain chose to continue business relationships with these customers, including customers with suspected criminal profiles and associations,” AUSTRAC’s notice of filing said.

“The failure to monitor these customers exposed Entain to the risk of being exploited by criminals and to the risk that proceeds of crime were being used to obtain designated services,” it added.

‘Potentially Material’

In a notice posted to the London Stock Exchange Monday, Entain said it had cooperated fully with AUSTRAC throughout its investigation and had implemented “enhancements” to its AML protocols. But the company acknowledged that the impending civil proceedings “may result in a penalty being levied which could be potentially material.”

This is the first time AUSTRAC has launched civil proceedings against an online betting operator. However, last year it hit brick-and-mortar casino operator Crown Resorts with a A$450 million (US$285 million) fine for historic AML and counterterrorism financing law breaches.

A company would never want the words ‘money laundering’ anywhere near it and that’s why news from gambling outfit Entain is potentially damaging,” Russ Mould, investment director at AJ Bell said.

“An Australian crackdown has seen other operators pay out material sums in fines and Entain faces a nervous wait to find what, if any, damage will be done to the balance sheet and its reputation by any eventual judgement,” he added.

“This issue could hang over the business for some time to come as proceedings at Australia’s federal court could take a good while to reach a conclusion.”

No Stranger to Fines

Last year, Entain was fined £585 million (US$743 million) by HM Revenue & Customs, the UK tax agency. The penalty related to alleged bribery at its former Turkish business.

A year earlier the company was fined £17 million (US$22 million) by the UK Gambling Commission for social responsibility and AML failures.

“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,” Entain chairman Gavin Isaacs said in a statement Monday.