Flutter Entertainment has agreed to pay a $4 million civil penalty to the U.S. Securities and Exchange Commission.

The penalty relates to the historical activities of the PokerStars business in Russia between 2015 and 2020, prior to its acquisition by Flutter Entertainment in May 2020.

During that period, PokerStars spent almost $9 million on consultants in Russia, in what it described as lobbying efforts to legalise online poker in the country.

According to the U.S. Securities and Exchange Commission (SEC), the company failed to devise and maintain a reasonable system of internal accounting controls governing its relationship with and payments to the Russian consultants, and failed to adequately monitor and record such payments in its books and records.

The shortcomings in the company’s processes were self-notified to the SEC and other authorities, and the company subsequently adopted a policy requiring risk-based due diligence, written contracts, and approval by the CEO or general counsel of all consultants, lobbyists, and lawyers.

However, the company continued to make payments to the Russian consultants in violation of this policy.

In one case, the company made payments totalling approximately $461,000 for expense reimbursements that lacked documentation. These payments included $57,000 for what was invoiced as a payment for “bill draft and submission”; $22,000 as reimbursement for expenses relating to a consultant’s dealings with internet regulator Roskomnadzor; and $139,000 in lobbying fees or costs that lacked any supporting documentation.

The SEC said that $1 miilion of this amount was paid after the company’s securities (then known as Amaya) were registered with the Commission, with those payments recorded as lobbying fees. However, the company held no documentary justification to support this accounting.

As a result, Flutter Entertainment was found to have breached sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and will pay a civil penalty of $4 million to the SEC within the next 30 days.

The SEC investigation was supported by the Québec Autorité des Marchés Financiers, the Latvia Financial and Capital Market Commission, the Belize International Financial Services Commission, the United Kingdom Financial Conduct Authority, the British Virgin Islands Financial Services Commission, the Central Bank of Armenia, the Czech National Bank, the National Bank of Georgia, and the Cyprus Securities and Exchange Commission.

Flutter Entertainment withdrew from the Russian market in early 2022.

https://www.gamingintelligence.com/legal/rulings/170096-flutter-entertainment-agrees-4m-civil-penalty-with-sec-for-payments-in-russia/