Entain, the British online gambling giant and Ladbrokes parent company, saw its shares drop nearly 7% following AUSTRAC's announcement of legal action over alleged anti-money laundering (AML) violations in Australia.

According to Australia's financial intelligence agency, Entain accepted AU$152 million (US$96 million) in bets from 17 customers with suspected criminal connections, despite being aware of the risks. This marks AUSTRAC's first civil proceedings against an online betting operator.

"In spite of often being aware of the high money laundering and terrorism financing risks, Entain chose to continue business relationships with these customers," AUSTRAC stated in their filing notice.

Entain acknowledged the situation in a London Stock Exchange notice, confirming their cooperation with AUSTRAC and implementation of enhanced AML protocols. The company warned that potential penalties could be "material," similar to Crown Resorts' recent AU$450 million (US$285 million) fine for similar violations.

This isn't Entain's first regulatory challenge. The company previously faced:

• A £585 million fine from UK tax authorities in 2023 over alleged Turkish business bribery
• A £17 million penalty from the UK Gambling Commission in 2022 for AML and social responsibility failures

Entain chairman Gavin Isaacs responded, "We are committed to keeping financial crime out of gambling and continue to play our part in supporting a well-regulated and compliant sector."

Investment director Russ Mould of AJ Bell noted that these proceedings could impact both Entain's balance sheet and reputation, with the federal court process likely to extend over a considerable period.

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