Entain’s ‘surprising’ bribery update
Entain’s bribery infraction admittance, Dutch ad confusion, NC’s legalization move, Betway exits Kenya +More
Good morning. On the agenda today:
Entain’s DPA announcement ‘unusual’, says bribery lawyer.
North Carolina Is on the cusp of legalizing statewide mobile betting.
Incoming Dutch ad ban is stumping operators.
Betway quits Kenya; tax authority under fire.
Forget the Janes, the jeans and the might-have-beens.
Entain’s bribery ‘surprise’
Legal experts suggest the company has taken the “unusual step” of making public the negotiating process with the Crown Prosecution Service.
Going public: Entain announcing publicly it is in negotiations with HMRC and the Crown Prosecution Service (CPS) with regard to what it admitted would be a “substantial financial penalty” is “surprising”, according to one business and financial crime lawyer.
Entain said yesterday it was in negotiations over a deferred prosecution agreement (DPA) with the CPS with regard to its previous Turkish-facing activities.
The company is being investigated for suspected offenses in relation to section 7 of the Bribery Act, which involves a company or individual failing to prevent an act of bribery taking place.
The company said yesterday the consequences of the investigation were likely to involve a “substantial financial penalty”.
“The company cannot identify reliably at this stage the size of any financial penalty,” the statement added.
Premature articulation: Colette Kelly, partner at Ince and an expert in business and financial crime, noted that Entain’s decision to issue a press release about being in discussions with the CPS might be considered to have jumped the gun.
“It's all very well Entain saying ‘we've entered into negotiations for a deferred prosecution agreement’,” she told C+M.
“But nothing is settled and nothing is agreed at this stage.”
She added that it would eventually be up to a judge to decide whether to agree with the terms of the DPA.
“I do think that, in my view, Entain has been premature in announcing they are in negotiations. Because nothing is done at this stage without the approval of a High Court judge.”
Kelly also noted that, if agreed, this would be the first such agreement for the CPS.
Eoin O’Shea, partner at CMS and head of its white collar department, said it would be up to the prosecutor to decide whether the DPA was something they wanted to offer and it was “up to the company whether they would want to accept”.
Do y’ken: No mention in the statement was made of former CEO Kenny Alexander who resigned in July 2020, one week before the company said the HMRC investigations had broadened in scope. Whether he would be prosecuted separately depends on a two-stage process, suggested Kelly.
“The first stage is whether there is sufficient evidence for a reasonable prospect of a conviction,” she said.
If it passes that stage only then do you move on to the second stage, which is whether it is in the public interest to bring proceedings.
She cautioned that even if Alexander were to be charged, “it doesn't follow that he's going to be convicted”.
“But if he were to be convicted, whether that be by his own plea or after a jury trial, then, inevitably, it's a custodial sentence and confiscation proceedings would follow,” she added.
Take the cash: Entain said that since the investigation started it had undertaken a “comprehensive review” of anti-bribery policies and procedures and taken action to strengthen its wider compliance controls.
But analysts at Regulus suggested regulators in the UK and North America would likely “see this development as material and be requiring updates”.
Entain’s legacy Turkey issues are a “valuable warning” that gray and black market workarounds “might look good on paper,” but can be “dangerously transparent” in the face of effective scrutiny.
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North Carolina on the verge
Having legalized retail sports betting in 2019, the Tar Heel State is on the verge of passing legislation to legalize statewide mobile betting.
Slings and arrows: In the last two weeks, the NC Senate has sprung to life and taken action on HB 347, an OSB bill passed by the House in March. HB 347 has passed through all requisite Senate committees, passed first and second reading and now awaits a final vote on the Senate floor.
But – and there’s always a but – the Senate has made a slew of changes to the bill.
Make amends: Should the NC Senate ultimately pass the bill, it’s unclear if the House will concur with the numerous changes the Senate has made. While not trivial, backchannel chatter indicates most of the changes should be palatable to the House:
The tax rate increased from 14% to 18%.
Promotional deductions are no longer authorized.
The launch date changed from Jan 8, 2024, to within 12 months after passage.
Licensee requirements that include in-state investment and jobs.
The most controversial amendment added during the Senate process didn’t make the final cut, as the inclusion of historical horseracing machines was stricken from the bill.
Back to the future: The House may agree to the Senate’s changes, but an equally likely outcome is a conference committee, where selected members from the House and Senate will be tasked with finding common ground between the two versions of the bill.
Blot on the landscape: Since the repeal of PASPA, the US has morphed from a sports-betting desert to a fertile crescent. From a single state with legal sports betting to nearly 40, with 30 states passing OSB laws. Because of its success, legalization has slowed to a trickle.
2022 produced three new OSB states: Kansas, Maine and Massachusetts.
If NC can get a bill across the finish line, 2023 would match 2022’s tally: Kentucky, Vermont, North Carolina.
The two most populous states, California and Texas, are among the holdouts.
The third-most populous state, Florida, is in legal limbo as its sports-betting law/tribal compact is making its way through the courts.
Those three states comprise 28% of the US population.
US notebook
Return to sender: The Massachusetts Gaming Commission has joined its voice to that of other states in calling for more action from the Federal authorities to crack down on illegal gambling.
The MGC has sent a letter to US Attorney General Merrick Garland echoing what was said in a previous letter from six other states in April, which called on the Department of Justice to “prioritize investigation and prosecution” of offshore sites.
Nevada: A resolution to change the state constitution and remove the century-and-a-half ban on lotteries has passed the state Senate having previously got the nod from the Assembly. It now has to pass two more legislative sessions before it is put in front of the voters in 2026.
Dutch ad ban confusion
The Netherlands’ untargeted ad ban enters force on July 1, but legal experts believe fuzzy messaging from the regulator is generating risks for businesses struggling to stay compliant.
Fade to black: All forms of advertising that can be viewed by the general public will be outlawed, including radio, TV and billboards in public, along with collateral in private places where people gather, such as cinemas, cafes and arcades.
The aim, under Dutch laws, is to protect vulnerable groups such as children and problem gamblers.
Land-based gambling businesses are still allowed to advertise, but only for land-based products and services. No link to online play is permitted even if the operator runs both types of service.
All forms of sponsorship, including sports teams and TV shows, are also caught up in the laws, with a transitional period applying to existing sponsorship contracts until July 1, 2024.
Athletes, clubs, competitions, shirt and other material sponsorships will remain permitted until July 1, 2025, to phase out contractual obligations.
How far is too far? Online advertising, direct mailing, on-demand TV, social media or ads in the online gaming space are allowed under certain conditions. There are obligations on license holders to ensure ads do not reach certain groups, but industry watchers told C+M there is a lack of clarity from the regulator on how far operators need to go.
“It would have been helpful and efficient [if] the KSA had provided more precise guidance on what is expected from the industry,” said Justin Franseen, head of the gaming group at Kalff Katz & Franssen.
“What is exactly meant by the ‘best possible techniques’ to exclude the vulnerable from being exposed to untargeted advertising? This remains unclear to date,” he said.
The KSA has aggressively enforced licensing matters since Dutch law changed last year, and experts predict it will take a similarly zero-tolerance approach to policing the ad ban.
Where we’re speaking
Gaming in Holland: C+M’s Scott Longley will be moderating a panel assessing the prospects for the gaming affiliates in the Netherlands at the Gaming in Holland conference on June 8.
He will be questioning Joris Dekkers, managing director for the Netherlands at Better Collective, Steven Vrolijk, founder of KVA, and Frank Op de Woerd, co-founder, CasinoNieuws.
Ad ban notebook
Germany: Federal drug commissioner Burkhard Blienert has called for a ban on gambling ads, saying the “over-presence” of gambling alongside tobacco and alcohol needs to be brought to a halt.
“The vast majority of the population no longer wants [sponsorship] by sports-betting providers in football. Politicians can no longer ignore that.”
Netherlands notebook
Warning: The Netherlands gambling regulator Kansspelautoriteit has warned that lottery operators Postcode Loterij and VriendenLoterij could face fines of up to €1m if they continue to offer games not covered by their licenses.
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Betway quits Kenya
One of the East African markets' most well-known gaming brands has walked away, on the heels of other exits driven by high taxes.
We gone: First reported by iGamling Afrika, Betway ceased trading in Kenya as of May 16, shuttering all of its operations and telling affiliates and partners to stop promoting the business.
Betway’s sharp exit follows a similarly abrupt departure by BetKing in February.
The Kenya Revenue Authority (KRA) collects a 7.5% excise tax on betting, gaming and lottery sales along with a 20% withholding tax taken from punter winnings every day.
The government has set a deadline of the end of June for operators to hook their systems up with the KRA’s real-time tax tracking system or face having their authorization shredded by the Betting Control and Licensing Board.
Those plugged into the system are required to remit the excise and withholding duties on a daily basis, rather than monthly.
Taxed to death: Operators have warned the government more firms are likely to quit and punters will move to the black market, given corporation income tax is a further 30% and a 16% value added tax to sales also applies on top.
“The local market is likely to be infiltrated by online operators from offshore jurisdictions,” said the Betting Companies Consortium, which represents Kenyan operators. “Unchecked transactions, which will not be regulated, may cause social harm and loss of the much-needed revenue by the government.”
“Taxes are necessary but that again doesn’t mean we use taxes as the full-scale weapon to fight the evil,” added Ruth Ndichu, head of tax policy at Sportpesa.
Dirty situation: If that wasn’t enough drama, the tax authority itself has felt the wrath of the country’s president William Ruto, who told a recent press conference some unscrupulous operators were bribing KRA staff.
“Those people from betting companies pay staff at KRA and you know they do,” he said. “Instead of staff collecting money for the government, they collect it for themselves. You know it's true and, if you doubt it, I can come and tell you who it is.”
“Collusion, wanton bribe-taking and general corruption continue to pervade operations of KRA.”
“That space needs much clarity and I am happy that the Central Bank of Kenya is taking steps to bring the actors in the online betting space to regulations so we can make them much more accountable.”
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Australia notebook
The Australian Communications and Media Authority has written to Curaçao’s Ministry of Finance over the activities of gambling operators in the territory, complaining that some licensees are illegally providing gambling products to the Australian market.
North America notebook
Quebec: DraftKings, Flutter, Entain and Betway are among the operators that have formed a new lobbying association in Quebec, which hopes to emulate the success of the effort in Ontario in managing to get online gaming regulated.
The Quebec Online Gaming Coalition hopes to address growing concerns about consumer safety, responsible gaming, advertising and substantially increasing government revenues based on a new licensing regime for qualified private operators.
G2E Asia notebook
Call the cops: AGA president Bill Miller told the conference taking place in Singapore this week that international regulators and law enforcement would need to cooperate in order to combat illegal gambling.
“Illegal gambling is an issue that tops our list of responsibilities in the United States and together we need to make a global commitment,” Miller was reported as telling the audience during his keynote speech..
Nagasaki doubts: The chair of the National Council on Gaming Legislation in Japan, Toru Mihara, told a panel that the “ball is in the hands of the prefecture” with regard to the central government’s request for further information.
“That homework has been assigned to the prefecture [but] it may take months to respond,” Mihara was reported as saying, citing multiple discussions with central government officials.
Regtech notebook
Odds On Compliance has launched Playbook Europe, a database covering 21 European markets.
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