Back in hot water
Entain’s AUSTRAC AML beef related to criminal proceeds
Entain accusations in Australia heap pressure on the share price.
In +More: PrizePicks opens new headquarters in Atlanta.
Vegas CEO Scott Sibella has license revoked.
South Carolina takes another run at sports betting.
Georgia court dismisses a sweeps class action suit.
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Proceeds of crime
Going down (under): The AUSTRAC investigation into the activities of Entain’s two brands in Australia relates to A$152m ($96.6m) of wagers the company accepted from 17 high-risk individuals who have “suspected criminal profiles and associations,” according to reports in Australia.
The news of the AUSTRAC investigation came yesterday when the financial intelligence agency said it had commenced civil penalty proceedings in the Federal Court.
AUSTRAC CEO Brendan Thomas said the agency “considers there were systemic failures” in Entain’s approach to its AML/CTF obligations.
Déjà vu all over again: The allegations come 18 months after Entain came to a £585m settlement with the UK’s tax authorities over its previous activities in Turkey.
Analysts at Investec noted the investigation related to activities dating back to December 2018 and continuing as recently as this month.
They added that Entain’s Australian business was worth ~10% of Entain’s revenues over the period and mid-single digit EBITDA.
Just seventeen: The allegations included the failure to conduct appropriate checks on 17 higher-risk customers where, AUSTRAC alleged, Entain “did not appropriately deal with the risk that its online betting sites were being exploited by criminals to spend the proceeds of serious crime.”
You know what I mean: The agency said 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.”
The Entain share price fell nearly 7% in trading in London yesterday after Entain issued a terse statement that said it was “carefully considering” the AUSTRAC filings.
Out of sight: The investigation was first announced in September 2022. The AUSTRAC allegations suggested Entain Group Pty’s management and board “did not have appropriate oversight” of its AML/CTF program, which “limited its ability to identify the ML/TF risks it faced and its vulnerability to criminal exploitation.”
It added that third parties, including businesses and individuals, accepted cash and other deposits on behalf of Entain to be credited into betting accounts in ways that could obscure the proceeds of crime.
“Cash is less transparent than other forms of money and is at higher risk of being the proceeds of crime,” the AUSTRAC statement added.
Moreover, Entain “did not have appropriate controls to confirm the identity of customers making these deposits and the source of this money.”
Money problems: The filing is reported to allege that the 17 high-risk customers “deposited in excess of A$152m into their betting accounts and withdrew in excess of A$105m from their betting accounts.”
“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.
Men with no name: Entain was unable to “comprehensibly or consistently detect” unusually large deposits, cash bets, anonymous gambling and bets from a foreign country “on Entain’s restricted jurisdiction list.”
It was also accused of running a “pseudonym register” and disguising the identities of customers who wanted to “protect their privacy.”
AUSTRAC also claimed Entain failed to properly screen for “politically exposed persons.”
Additionally, Entain was accused of accepting cash from “exclusive affiliates” who were paid to act as intermediaries who accepted bets and generated new revenue streams.
Do you remember the first time? The AUSTRAC statement noted this was the first time it has brought civil penalty proceedings against businesses operating in the online betting sector. However, the body said it can also be seen in light of its “ongoing work” focused on gambling businesses in Australia.
This includes two penalties levied against Crown totalling A$450m and its actions against SkyCity, which saw that company pay A$63m in penalty fines.
AUSTRAC has also previously accepted an undertaking from Flutter’s Sportsbet and a case is continuing against Star Entertainment.
Entain said that any penalty levied by AUSTRAC “could be potentially material.”
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+More
Let’s see where this goes: PrizePicks has opened new headquarters in Atlanta as sports-betting proponents continue to push for legalization in Georgia. Earlier this year, a bill that would have put sports betting on the election ballot in the Peach State failed.
Georgia’s governor Brian Kemp, cutting the ribbon at the ceremony, said he has maintained a neutral stance regarding legalized sports betting.
Mike Ybarra, CEO of PrizePicks, said the firm would continue to focus on daily fantasy sports.
“It’s where we come from, it’s where our business is,” Ybarra told reporters. “We’re not pushing online sports. We love our relationship with the governor and his team, and the growth of our business.”
Novomatic Americas CEO Alexander Merwald is moving to take over the firm’s South Africa operators. Sabine Stoppel, who has been with Novomatic for more than 35 years, has been promoted to run the Americas operation.
In da club: Fresh off expansions in Germany and Sweden, LeoVegas Group has joined the European Gaming and Betting Association.
Proposals for a state lottery (although likely nothing else) have a good chance of passing in Alabama if legislators get their act together, reported local media outlet 1819 News.
A gambling and lottery double-bill failed at the last in May, however politicos think the lottery will reappear and could go all the way as the influential Poarch Band of Creek Indians snapped up Birmingham Race Course to solidify their power in the state.
Maverick Gaming’s appeal in its effort to challenge the exclusivity of sports betting for tribes in Washington State has been rejected.
Data on its mind: The Nevada Gaming Control Board is considering adding a licensing process for sports-betting data providers. The board said the proposed licenses would be for third-party data providers creating lines and odds for events.
It said that potential providers under the licensing process could include Sportradar, Genius Sports and LSports.
A decision on the proposed licensing process will likely be made next year.
Virtual Gaming Worlds said its Global Poker brand is planning to shutter operations in Nevada.
In an emailed statement to customers, Global Poker said that, as of next April, customers will no longer have access to their accounts and personal data associated with their accounts.
Last Resorts
Number’s up: Nevada has temporarily blackballed former MGM Grand and Resorts World Las Vegas president Scott Sibella for letting illegal bookies use his casinos. Sibella entered an agreement with the Nevada Gaming Control Board that will run for five years.
In January, he pled guilty to federal charges of allowing criminals to gamble more than $4m at his venues.
Queasy Nix: Sibella was MGM Grand president between August of 2017 and February of 2019 when underground bookie Wayne Nix gambled at MGM Grand and its sister properties. Nix, wagering with illegal proceeds, was also comped meals, room, board and golf trips with senior executives and other whales.
After taking his $120,000 debt in cash, MGM Grand didn’t report suspicious activity or conduct checks on the source of funds.
Sibella admitted later that he turned a blind eye due to the millions of dollars Nix and other assorted felons spent at Resorts World.
Wild World: Resorts World’s compliance culture was rotten, Nevada’s gaming regulator said, as it alleged “an overall lack of control” where the pressure to generate revenue and bonuses linked to performance meant staff were happy to take money from anywhere.
The casino’s compliance team were also accused of rewriting meeting minutes concerning the source of income of an illegal bookie linked to a Major League Baseball star.
Mathew Bowyer took tens of thousands of bets from Ippei Mizuhara, the former interpreter of Shohei Ohtani who stole over $16m from the two-way All Star baseball player.
Sibella, despite being president and on the compliance committee, never attended a single meeting.
Meet the new boss: Earlier this month, it was announced former MGM Resorts CEO Jim Murren would lead a newly formed board of directors at the casino.
Sibella ran MGM Grand and other MGM properties under Murren’s tenure.
The Nevada Current reported Murren was informed in 2019 that Sibella “was catering to unsavory gamblers.”
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South Carolina, again
Back to the grill again: South Carolina lawmakers have sports-betting legalization ready to go for the 2025 legislative session. HB 3625, the South Carolina Sports Wagering Act, would allow for up to eight licenses and a state tax rate at 12.5% of adjusted sports-betting gaming revenues.
The bill has bipartisan support, but carries baggage; the Palmetto State has rejected sports betting several times in recent years.
Noisy neighbors: Industry watchers said the success of North Carolina’s market may have spurred action, ahead of the state’s legislative opening session on January 14, 2025.
The legislation would only allow operators who are already established in at least five other states to apply for a license, and it would allow betting on college sports.
Applicants must pay fees of $1.1m when lodging papers and, if successful, will be given a five-year license.
The state has no casinos or horse racing, and previous legislative efforts have died without ever troubling the business end of the lawmaking process.
Thrown out
Get out of here: A Georgia federal judge has dismissed a class action lawsuit against sweepstakes casino operator VGW on procedural grounds.
The ruling said that accessibility of “casino gaming websites” by Georgia users and acceptance of payments by VGW is a “limited interaction” that is insufficient to confer personal jurisdiction over the company pursuant to Georgia’s long-arm statute.
Slide away: According to the filing posted on LinkedIn by attorney Daniel Wallach, the court has adopted a “sliding scale” test for the assertion of long-arm personal jurisdiction based on business conducted over the internet.
The court said that while the “defendants’ casino gaming websites were certainly accessible by Georgia users” and the defendants “accepted payments from Georgia users in order to play the games,” the court found this to be a “limited interaction.”
It added that it “concludes that the defendants are not subject to personal jurisdiction under the Georgia long-arm statute.”
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