Posted on: December 11, 2023, 07:58h.
Last updated on: December 11, 2023, 07:58h.
Global gaming giant Entain is grappling with a $730-million fine linked to bribery allegations stemming from its past operations in Turkey. However, the UK’s Crown Prosecution Service (CPS) is offering a potential lifeline by deferring the prosecution and fine, provided Entain makes a swift exit from the Latin American market.
Entain, the company behind popular gaming brands like Ladbrokes and PartyPoker, had previously expressed its intention to withdraw from markets lacking regulatory frameworks. However, it has continued its operations in certain jurisdictions.
The CPS has now mandated that the company depart from Brazil, Chile, Mexico, and Peru within a year. Failure to comply will result in the enforcement of the prosecution order.
Nevertheless, the CPS is willing to show flexibility if Entain can convincingly demonstrate that the target country is on the verge of establishing a regulated market. Entain must meet this requirement within one year from the date of the court order, December 5.
Latin America’s Disjointed Market
In Brazil, a lengthy legislative process appears to be drawing to a close with the approval of Bill 3626/23 by the Chamber of Deputies. If passed in the Senate, where it has faced numerous delays, sports betting and online casino games will be directly licensed for the first time.
However, the final text of the legislation is pending approval, and the process has encountered significant delays over the past five years. In addition, the provisional measure that gave way to the temporary operation of sports betting just expired.
Chile is also making progress in opening up online licensing, but debates persist over the bill’s content. The current proposal includes a one-year cooling-off period for operators, adding an additional layer of complexity to the legislative landscape. That period would mean that any operator currently active would have to wait a year from the date of legalization to re-enter the market.
Mexico presents a more challenging scenario, as the existing legal framework permits licensed operators to collaborate with third parties to offer online gambling through their licenses. Entain, through its bwin brand, has partnered with a local casino.
However, a recent presidential decree seems to prohibit this practice. The government can no longer issue new licenses and existing licenses won’t be eligible for renewal upon expiration.
In Peru, a regulatory decree has been enacted to allow online gambling operators to obtain licenses, with the issuance expected to commence next year. Despite this positive development, the regulatory timeline remains uncertain, potentially necessitating Entain’s exit from the market in the interim.
Time to Start the Dance
Entain, which is experiencing something of an investor revolt, isn’t likely to roll over and immediately withdraw from the markets. Because all four of the countries are in the process of attempting to create regulated gaming frameworks, it will try to leverage this in order to keep its presence in those jurisdictions alive.
The company hasn’t provided feedback on what its next steps will be. When the DPC issued its ruling, Entain chair Barry Gibson said in a statement that the company has “fundamentally and profoundly changed,” without going into detail about how it’s changed.
Entain currently operates several brands, including Sportingbet and Betboo, in Latin America. Neither has performed as well as the company had hoped, but they still provide significant financial support to Entain’s bottom line. If they leave, the impact will certainly be felt.
The impact is already being felt in the company’s stock. It was $19.18 at the end of January, but is now just $10.03.