Flutter forks out $4m SEC settlement over alleged poker consultancy violations in Russia
Flutter Entertainment has agreed to pay a $4m settlement in the US after the SEC accused The Stars Group (TSG) of violating laws related to foreign bribery.
Flutter, which acquired TSG and its PokerStars brand as part of a £10bn deal in 2020, has entered into a settlement with the US Securities and Exchange Commission (SEC).The deal was confirmed by the SEC on Monday 6 March.
The SEC alleged that TSG paid approximately $8.9m to Russia-based consultants without proper due diligence as it pushed for the legalisation of poker in the country between 2015 and 2020.
TSG shares were registered with the SEC and listed on Nasdaq during that period.
The SEC statement said TSG failed to consistently make and keep accurate records regarding consultant payments in Russia, including by inaccurately recording certain payments as lobbying fees.
The alleged breaches related to three Russian consultants, labelled A, B and C by the SEC, which said no due diligence was performed on the trio upon their initial retention by the predecessor parent company of PokerStars back in August 2014.
Then, by 2016, the company’s board undertook a review to determine whether the company or its staff had made improper payments to government officials in certain foreign jurisdictions.
As a result of this review, the company voluntarily contacted the SEC and other US and Canadian regulators.It then adopted a new policy based on risk-based due diligence, written contracts and approval by the CEO or general counsel of all consultants, lobbyists, and lawyers.
The SEC took note of this policy but said the company continued to violate it. For example, the firm made payments to consultant C totalling $461,000 between 2015 and 2018.
You can read the full SEC statement here.
A Flutter spokesperson said: “This is a legacy issue, related to a period prior to Flutter’s ownership of the Stars Group.
“Following our acquisition of TSG, we made significant changes to implement a framework of controls in line with Flutter’s existing standards.“We are pleased that this matter has now been concluded.”
During the period in question, Russia was classed as a grey market by TSG and revenues generated from Russian consumers provided a significant source of revenue for the group, said the SEC.
Poker was never legalised in Russia. In March 2022, following Russia’s invasion of Ukraine, Flutter’s PokerStars brand exited the Russian market.
In full-year 2021, Russia accounted for £41m of Flutter revenue while Ukraine contributed £19m.