Britain-based Entain plc, co-owner of BetMGM, began the week by facing the criminal-penalty phase of a probe into its anti-money-laundering controls (AML) in Australia. Financial regulator AUSTRAC has accused Entain of “serious and systemic non-compliance” with both AML and counter-terrorism rules.
“AUSTRAC’s proceedings allege that Entain did not develop and maintain a compliant anti-money laundering program and failed to identify and assess the risks it faced. We are alleging this left the company at serious risk of criminal exploitation,” said AUSTRAC CEO Brian Thompson.
In a December 16 investor note, Jefferies Equity Research analyst James Wheatcroft sought to put the announcement in a wider context. He observed that this was “a case that first surfaced some two years ago.”
While no timeline or penalty amount had been mooted, Wheatcroft said, the timeline for such phases had been known to stretch for as much as one or even two years. Penalty amounts range from relatively minor (£20 million) to major (£225 million).
Crown Resorts paid a £225 million fine for engaging in money laundering. If Entain is hit with a similar punishment, Wheatcroft estimated, the share price would drop would be 35 pence or four percent of Entain’s current market capitalization.
Wheatcroft stated that Entain “has co-operated with AUSTRAC and has since launched an AML and CTF enhancement program to address any issues identified, but proceedings may take some time to conclude.”
The analyst concluded by noting that Entain seemed prepared for the levy, having advised shareholders in advance. Previous Australian fines in the gaming sector include US$28.7 million against Tabcorp in 2017, $63.7 million on Star Entertainment three years later, Crown’s $286.5 million last year, and $42.7 million against SkyCity this year.
