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The Crown Prosecution Service (CPS) has ordered Entain to leave Mexico, Brazil, Chile and Peru within a year or lose the protections of its £600m deferred UK prosecution agreement, but the gambling giant retains some wiggle room.
Entain agreed to pay a hefty penalty in return for the CPS deferring any potential prosecution over bribery allegations relating to its former business in Turkey.
However, the deferred prosecution agreement (DPA) also includes specific orders with which Entain must comply, including leaving any so called “regulating markets”.
“Entain shall exit all gambling markets in which it is currently operating and which markets are not yet subject to gambling regulation,” the DPA says.
Specifically, the CPS defines the markets in question as Mexico, Brazil, Chile and Peru.
The view UK law enforcement has of the legality of grey market operations in general raises difficult questions for the industry. Chief crown prosecutor Andrew Penhale has explicitly warned the industry to take note.
“The wider gaming industry may wish to reflect on the implications of this agreement for their own corporate compliance procedures and, where appropriate, take action to address and report any failings they identify. The CPS will continue to work closely with law enforcement partners in this area, such as HMRC, as well as the industry regulator, the Gambling Commission," he said.
The UK's tax authority HMRC issued a further warning. "HMRC is committed to creating a level playing field for businesses and this judgement should serve as a wake-up call to others to make sure their house is in order," said its chief investigative officer, Richard Las.
Entain has a year from the date of the court order to comply with the demand. The operator told the CPS that other than those four markets it was not active in any jurisdictions “where gambling is not currently lawful as a matter of local or EU law”.
That definition would include Austria, according to the understanding of some official bodies, including the Austrian government.
However, the CPS appears to have accepted Entain’s arguments that there is reason to believe EU laws give it a right to offer in defiance of the Austrian monopoly.
Finland was also given a pass according to the same reasoning, although the CPS noted that the Finnish government has committed to introduce a licensing model by the start of 2026.
“Entain will continue to update the CPS should the position change materially in relation to any of the matters described above,” according to the DPA.
Progress towards regulation in Brazil, Chile and Peru may yet allow Entain to remain in the grey market, however.
A further provision of the DPA allows for Entain to request an extension from the CPS if it has reason to believe that “the process of regulation will be completed” in the near future. But it sets a hard cap at no more than a further year after the initial court order, in other words roughly 24 months from now.
Peru has enacted a regulatory decree to allow for online gambling operators to become licensed and is expected to begin issuing them next year, but an uncertain regulatory timetable could force a grey market exit in the meantime.
A long-running legislative saga in Brazil appears to be drawing close to a conclusion, with both sports betting and online casino games set to be licensed directly for the first time under a bill that has been approved by the lower house of Congress and awaits a vote in the Brazilian Senate that may occur as soon as next week. Still, the final text of Brazil's new legislation is still yet to be approved and the process has been subject to numerous delays in the past five years.
Legislation to open up online licensing is making progress in Chile, but fierce debates are still raging over the content of the bill, which in any case currently includes a one-year cooling-off period for grey market operators.
In Mexico, the situation is murkier, with the current legal framework allowing for licensed operators to partner with third-party skins to offer online gambling via their permits. Entain has partnered with a local casino through its bwin brand. However, local operators now face a new presidential decree that would appear to prohibit that practice, albeit only upon the expiry of existing licences.
An Entain spokesperson told Vixio GamblingCompliance: “In contrast to the old GVC, all Entain’s revenue is now from regulated or regulating markets, and we're proud to be the only global operator that can make that 100 percent claim.”
