Perhaps in keeping with the U.K.’s current political and economic ethos, as articulated by the nation’s new Labour ruling classes, “that things can only get worse before they get better”, embattled British gaming giant Entain is bracing itself for yet another institutional beating.
The owner of Ladbrokes Coral, Sportingbet and a host of other storied international mainstream and iGaming brands, as well as the BetMGM U.S. sportsbook with MGM Resorts, was hammered with a £585 million fine (US$768.81) by U.K. tax and prosecution services earlier this year–the largest such sanction in national history–for historic corruption and money laundering breaches by a Turkish subsidiary.
It has fired a CEO–Jette Nygaard-Andersen–, who’s fiscal and reputational recovery strategy has since been vindicated. It eased Barry Gibson off his Chair. And it’s hired a respected gambling industry veteran, Gavin Isaacs, to lead it back to the Promised Land.
But nothing, it seems, has stemmed the flow of corporate blood and stopped the dance of disaster at the wounded FTSE100 leviathan.
Now a group of hitherto “unnamed” institutional investors are bringing a class-action lawsuit against the former GVC Holdings–rebranded Entain after the Turkish imbroglio–that could conservatively cost the company between £100 million to £150 million in compensation (US$131.42m-US$197.13m) for a share slide that has seen its paper value almost halve in a mere 12-months.
Legal Eagles
Some 20 big (and counting) Entain shareholders lodged the lawsuit in the U.K. High Court last month, credible media sources have reported.
According to the reports, the legal redress for compensation has been filed to the Financial List under the Financial Services and Markets Act 2000.
It is said that the investors are being represented by law firm Fox Williams, who aim to file the suit this Autumn.
Entain, for their part, have engaged legal eagles Slaughter and May to represent them in the coming action, it is reported.
Entain–then called GVC Holdings and led at the time by so-called gambling industry “legend” Kenny Alexander–were first investigated by Britain’s HM Revenue and Customs for Turkish wrongdoing in 2017.
The subsidiary in question, Sportingbet Turkey, was off-loaded.
But it was not enough to quieten investigators.
Finally, this January Entain agreed to pay a fine of £585 million to settle the dispute.
Vindication
Jette Nygaard-Andersen, who had been brought-in as the first female head of a major gambling industry company on January 21, 2021, to clean-up Kenny Alexander’s mess, also fell victim to the scandal’s repercussions; being fired in December last year.
In Entain’s latest otherwise dire financial H1, Nygaard-Andersen’s strategy of going large with a spree of acquisitions in Central and Eastern Europe to bring the company back to a semblance of profitability was proved to be the only bright financial spot on an otherwise blighted horizon.
Now, with share value continuing to fall, Isle-of-Man-headquartered Entain faces even more trouble.
“[We are] aware of these claims but [have] not yet been formally served with them, so these matters are at a very early stage,” Entain said in a statement.
“[We intend] to defend any proceedings robustly.”
The identity of the shareholders–many of them U.S. based–who are suing Entain has yet to be disclosed.
Venture capitalist Ricky Sandler of New York-based Eminence Capital, who owns a significant stake in Entain of some five-percent, has been notably critical of the U.K.-origin group in the recent past.
Watch this space.