Flutter is set to pay another fine related to its acquisition, The Stars Group, for activities conducted prior to Flutter’s purchase of the company in 2019.
The Securities and Exchange Commission (SEC) announced Tuesday that Flutter will need to pay a $4 million fine related to how TSG conducted Russian business from 2015-2020. The filing states that TSG violated the Federal Corrupt Practices Act and issued a cease and desist to TSG parent company, Flutter. Flutter has agreed to pay the fine but does not admit to any wrongdoing.
The incidents described in the filing refer to TSG parent company Oldford Group and the Russian consulting relationship inherited after Oldford Group was acquired by Amaya Gaming in 2014.
Per the SEC, the company paid $8.9 million to these consultants for improperly documented consulting services related to the company’s business in Russia. In the complaint, the SEC observed that Amaya did essentially no due diligence before electing to maintain the relationship with the trio of consultants used by Oldford Group. For example, one consulting firm maintained an address in Belize and a bank account in Latvia despite working exclusively on the Russian market for TSG.
Moreover, the company regularly accepted vague invoices from consultants that could not be tied to actual work product. One $1 million payment was said to be for lobbying efforts in the country but there were zero documents clarifying what the lobbying entailed and why it was so costly.
The filing also spoke about reimbursing gifts made to Russian decision makers on behalf of the company:
“From March 2017 to January 2018, the Company made six payments totaling approximately $139,000 to Consultant C as lobbying fees or costs, without any supporting documentation. Contemporaneous emails indicate that some funds were to reimburse Consultant C for New Year’s gifts to individuals including Russian government officials, which relevant Company policies prohibited.”
After the Flutter acquisition, the company did implement a system of internal controls to prevent such incidents from happening under the new regime’s watch. The SEC did warn Flutter to cease and desist and future behavior described in the complaint.
In March 2022, PokerStars suspended its Russian business in support of Ukraine. The company has yet to re-enter the market.
The $4 million fine pales in comparison to the $300 million Flutter is on the hook for related to the state of Kentucky’s successful lawsuit of PokerStars which was settled in 2021, ten years after it was initially filed.
Flutter acquired The Stars Group for $6 billion in October 2019. The deal included not just PokerStars but also FOX Bet and Sky Betting and Gaming.