Entain Plc is facing a pending lawsuit aimed at compensating institutional investors affected by the FTSE100 firm’s £585m penalty related to a bribery investigation of its former Turkish business by HMRC.

The claim against Entain is being prepared by Andrew Hill and Matthew Reach, the litigation team of London law firm Fox Williams, “on behalf of institutional investors, targeting autumn 2024.”

A claim period has been launched by Fox Williams, accusing Entain of failing in its regulatory duties to report bribery and corruption charges related to its Turkish subsidiary, Headlong Limited.

It is asserted by the litigation that Entain shareholders are entitled to compensation for transparency failures, as section 7 of the UK Bribery Act 2010 was violated by Entain. Section 7 states that “a company can commit an offence under section 7 of failure to prevent bribery if an employee, subsidiary, agent or service provider (‘associated persons’) bribes another person anywhere in the world to obtain or retain business or a business advantage.”

“This claim will allow institutional investors to recover substantial losses and, more importantly, improve transparency and governance in the UK’s gambling sector. Public companies need to take their disclosure obligations seriously. Hopefully, this will improve corporate behaviour, as shareholders won’t tolerate misconduct,” said Andrew Hill, leading the proceedings.

The affairs of former GVC Holdings subsidiary Headlong have come back to haunt Entain. A “definitive settlement” was agreed upon by Entain in December 2023 via a Deferred Prosecution Agreement (DPA) with the Crown Prosecution Service (CPS).

£600m will be paid by Entain as part of the settlement, including a £585m DPA financial penalty, disgorgement of profits, a £20m charitable donation, and a £10m contribution to HMRC and CPS costs.

Instalments will be paid by Entain over a four-year period from 2024 onwards. Corporate losses of +£900m were declared by Entain, yet booked on its 2023 accounts due to the DPA settlement.

It was stated by Entain’s corporate governance that the bribery charges were related solely to the former management team when the business was operated under GVC Holdings.

Ropsol Malta purchased Turkish subsidiary Headlong Limited in 2017, a deal required for GVC Holdings to proceed to acquire Ladbrokes-Coral for £4bn, later transforming its business to Entain Plc.

After a six-year legal challenge, Entain committed to generating “100 per cent of revenues from regulated or regulating markets by 2023.” Ongoing repercussions of the bribery charges have resulted in Entain’s LSE share price being halved to 680 GPX on a year-to-date basis.

Barry Gibson, the outgoing chairman who led the negotiations with the CPS, stated that the FTSE business had closed a chapter related to its former operations: “Entain has now fundamentally and profoundly changed. We can now concentrate on the future.”

Several high-profile investor litigations against FTSE Plc firms, including Tesco, Glencore, and BooHoo, related to transparency and governance failures have been led by Fox Williams.

A comment on a lawsuit yet to be filed against the company cannot be provided by Entain, as such developments are currently unknown.

At present, the search for a new Chief Executive to lead its financial recovery continues for Entain, which recently concluded a strategic review by the Capital Allocation Committee (CAC).

North American growth, driven by the ‘significant upside’ of its BetMGM joint venture, has been prioritised by the review. Further directives focus on executing ‘Project Romer’ as a key technical priority, which aims to achieve cost savings through the operational simplification of the FTSE global operating structure.