Entain included Antarctica and Vatican City on exit list in compliance drive

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Antarctica and Vatican City are among the list of more than 140 unregulated gambling territories that Entain said it had exited in a frequently cited statistic to show how the Ladbrokes owner had cleaned up its business, according to an internal document.

The London-listed bookmaker was not generating any revenues in these two territories in the run-up to closure, according to internal estimates, but they were nevertheless included in a list of areas from which Entain committed to withdraw as there was no path to domestic gambling regulation.

The worldwide exits were held up as part of efforts by Entain to overhaul its compliance, especially in light of a criminal bribery probe by British authorities that concluded last month with Entain agreeing to pay a £615mn penalty.

The deferred prosecution agreement Entain signed with UK prosecutors over historic wrongdoing at its Turkish subsidiary obliged the bookmaker to withdraw from unregulated markets. Entain pointed to how it had “exited approximately 140 markets where there was no clear path to regulation” in line with the DPA’s conditions.

Entain’s chair Barry Gibson also emphasised its success in withdrawing from more than 140 unregulated markets at its most recent trading update in November, saying it was “the right thing for the business”.

An internal tracking document maintained by Entain’s compliance team, seen by the Financial Times, shows that along with Antarctica and Vatican City, other territories with a permanent human population of less than 1,000 people helped make up the total of 140-plus unregulated gambling markets that the bookmaker exited.

These included the Pitcairn Islands, the French Southern and Antarctic Lands, and the United States Minor Outlying Islands.

Greg Johnson, an analyst at Shore Capital, said: “I struggle to see why it’s a great achievement to move out of markets you either weren’t ever really in or shouldn’t have been in the first place”.

Entain’s plan to close unregulated markets, which was first announced in November 2020 and completed at the end of last year, was known internally as “Project Sunrise”. According to the internal spreadsheet, Entain officially exited more than 100 other markets on December 17 2020. Subsequent rounds of market exits occurred between 2021 and 2023.

Bigger unregulated markets, such as Argentina, Russia and Ukraine, were also closed, according to the internal spreadsheet.

Entain’s board is wrestling with major shareholder unrest over the company’s poor performance and languishing share price, which resulted in its chief executive leaving last month. The company counts four US activist hedge funds among its top-20 shareholders, including Corvex Management and Eminence Capital, and last week granted Eminence’s founder Ricky Sandler a board seat.

Entain is the only major gambling group that has fully withdrawn from unregulated markets. But much of the industry is heading in a similar direction: industry rival Flutter, which owns Paddy Power and Sky Bet, derived 97 per cent of its revenues from regulated markets in 2022.

Shore Capital’s Johnson said withdrawing from unregulated markets had been “an easy win” for Entain, adding that it was a move aimed at “simplifying the business and having that nice round figure that you’re 100 per cent regulated”.

Entain said the company had foregone about £100mn in earnings before interest, taxes, depreciation and amortisation as a result of these market exits “to create a more sustainable, higher-quality revenue base”.

“We closed 140 markets where revenues ranged from significant to de-minimis at the time of exit, but where customers could bet with us,” the gambling group added.

Under the terms of the DPA agreed last month, Entain has a 12-month deadline to exit four further markets — Brazil, Chile, Peru and Mexico — if regulation is not achieved. However, Entain obtained a Mexican licence late last year and Brazil is expected to pass betting legislation early this year, so the company could remain in those markets.