Flutter Entertainment, the parent company of PokerStars, has agreed to a $4 million settlement with the U.S. Securities and Exchange Commission (SEC). The settlement resolves a cease-and-desist order related to misreported securities-related disclosures concerning payments made to Russian consulting entities for lobbying purposes.
The settlement primarily concerns actions taken during Amaya / The Stars Group’s ownership of PokerStars (between 2015 and 2020), before Flutter acquired PokerStars in 2020. The SEC’s nine-page report outlines payments made to three individuals and one company under the Amaya / TSG regime.
Key Details:
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Lobbying Payments: The SEC asserts that PokerStars failed to conduct proper due diligence on the Russian lobbyists it hired. These lobbying efforts became a matter of SEC interest after Amaya’s securities were traded on NASDAQ starting in June 2015.
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Total Payments: Between 2015 and 2020, PokerStars made lobbying-related payments totaling $8.9 million. Among these were funds funneled to Roskomnadzor (Russia’s state agency responsible for blacklisting online gambling operators), which led to PokerStars’ gaming servers being blocked multiple times.
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Improper Payments: The SEC also flagged payments made for New Year’s gifts to Russian government officials, violating the company’s internal policies.
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Current Status: Flutter has severed ties with most of the consultants involved, except for one, who continues to work with PokerStars on its 2022 withdrawal from the Russian market, following Russia’s invasion of Ukraine.
Early Lobbying Efforts:
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The lobbying efforts in Russia actually pre-date Amaya’s ownership, as PokerStars, under its Oldford Group entity, had retained three consultants in Russia, prior to the formal Russian gaming regulation.
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These consultants were involved in helping PokerStars navigate the Russian market during a time when there were no formal online-gambling regulations.
Red Flags and Inadequate Due Diligence:
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In 2015, Amaya hired a new consulting firm (referred to as “Consulting Company A“) to help with Russian gaming legislation. This firm raised multiple red flags, including being based in Belize with a payment account in Latvia. Despite these concerns, Amaya paid the firm $2 million in 2015, half of which came after the company registered its securities with the SEC.
Flutter’s Cooperation:
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The SEC acknowledged Flutter’s cooperation in the investigation and its efforts to enhance internal controls. The company has since implemented remedial measures such as improvements in its global compliance, due diligence processes, and internal accounting practices.
This settlement marks a significant resolution for Flutter, as it aims to move beyond these legacy issues while continuing to ensure that its business practices align with global regulatory standards.
