Jefferies Equity Analyst Prepares Investors for Entain AML Fine

At the start of the week, we announced that Ladbrokes and Neds’ operator and global gaming and betting company, Entain Group Pty Ltd, has been hit with civil penalty proceedings in Australia. 

The action, which followed a series of alleged breaches of anti-money laundering (AML) and counter-terrorism financing (CTF) policies, as described by the Australian Transaction Reports and Analysis Centre (AUSTRAC), was shortly followed by an investor note from an analyst for Jefferies Equity Research.

Potential Penalties of up to £225M

In his December 16 investor note, investment bank analyst James Wheatcroft provided context for the developing situation, emphasizing that this case had originally surfaced around two years ago. 

While no specific timeline or penalty amount had been confirmed so far, Wheatcroft highlighted that these types of investigations are typically spread over one to two years. 

One of the world’s largest sports betting and gaming groups could be hit with penalty amounts ranging from £20 million ($25 million) to as high as £225 million ($285 million).

In July 2023, the Australian gaming and entertainment group that owns and operates various entertainment complexes, Crown Resorts, was hit with an AUD 450 million (US$300 million) fine for repeatedly violating the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 between 2015–2022 by the Federal Court of Australia.

Wheatcroft speculated that, provided Entain would face a similar penalty, it could result in a share price drop of 35 pence, or about 4% of the company’s market capitalization.

Wheatcroft pointed out that Entain has openly cooperated with AUSTRAC and implemented an enhanced AML and CTF program to address “any issues identified.”

However, the 4.15-star Wall Street analyst added that the proceedings “may take some time to conclude.”

Wheatcroft concluded by noting that Entain seemed to be well-prepared for any potential penalty, having already informed shareholders in advance. 

Other major gaming industry fines in Australia include $28.7 million for Tabcorp in 2017, $63.7 million for Star Entertainment in 2020, Crown’s $286.5 million fine last year, and $67 million against SkyCity Adelaide earlier this year over the casino’s contravention of the AML/CTF Act.

At the start of the month, Tabcorp Holdings parted ways with a large number of workers in an attempt to better streamline its operation and cut business costs, following financial and regulatory difficulties for the betting and gaming giant. 

Toward the end of November, Star Entertainment confirmed the execution of a $130 million debt facility, in line with the announcement made by the group on September 25.