Entain exits unregulated jurisdictions in a drive towards fully regulated business model

Lea Hogg January 8, 2024

SiGMA news

Entain exits unregulated jurisdictions in a drive towards fully regulated business model

In a bold move towards regulatory transparency and corporate responsibility, Entain, the owner of Ladbrokes, has exited more than 140 unregulated gambling territories, a significant step in reshaping its global operations. Notably, Antarctica and Vatican City are among the regions on the exit list.

Achieving a 100% regulated model

Entain’s comprehensive compliance strategy, internally referred to as “Project Sunrise,” began in November 2020 and concluded at the close of last year. The initiative aimed to withdraw from markets lacking clear paths to regulation, reflecting the company’s commitment to rectify historic wrongdoing. The move was catalyzed by a criminal bribery probe by UK authorities, culminating in a £615 million penalty and a deferred prosecution agreement (DPA) signed by Entain.

Exit from over 140 territories

The DPA mandated Entain’s withdrawal from unregulated markets, and the company, in line with these conditions, exited from over 140 territories where regulatory frameworks were absent.

This proactive approach showcases Entain’s commitment to compliance, especially in the wake of its historic wrongdoing in Turkey. Barry Gibson, Entain’s Chair, emphasized the significance of the company’s success in withdrawing from over 140 unregulated markets, deeming it “the right thing for the business.”

The internal tracking document reveals that the territories with a permanent human population of fewer than 1,000 people, including Antarctica and Vatican City, contributed to the tally of unregulated markets exited by Entain. Greg Johnson, an analyst at Shore Capital, expressed skepticism about the significance of withdrawing from markets that the company either was not deeply entrenched in or should not have been involved in the first place.

Flutter, Paddy Power lead the way towards regulated markets

While facing shareholder unrest and leadership challenges, Entain’s board managed the closure of markets throughout 2021 and 2023, with major territories like Argentina, Russia, and Ukraine also being part of the strategic withdrawal. The move aligns with the broader industry trend, as competitors like Flutter, which owns Paddy Power and Sky Bet, increasingly derive revenues from regulated markets.

Entain acknowledges a financial sacrifice of approximately £100 million in earnings before interest, taxes, depreciation, and amortization due to the closure of these markets. The company, however, views this as a necessary step to create a more sustainable and higher-quality revenue base.

Looking ahead, Entain faces a 12-month deadline to exit four additional markets — Brazil, Chile, Peru, and Mexico — if regulatory milestones are not achieved. The company’s recent licensing success in Mexico and anticipated legislative developments in Brazil suggest a measured and strategic approach to future market exits.

Paving the way forward

Over the past five weeks, Entain has been at the forefront of a series of pivotal developments, showcasing its resilience and commitment to ethical business practices. The major shareholder unrest resulted in the departure of its chief executive. The company addressed internal discontent over leadership and has faced a number of tough challenges.

Entain’s strategic move to exit over 140 unregulated territories, including the symbolic Antarctica and Vatican City, reaffirms the company’s commitment to a more transparent and responsible global operation.

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