GVC Holdings denied allegations that, through its CEO Kenny Alexander, it has not entirely cut ties with its Turkish operation, which it sold back in 2017 in order to be allowed to complete its £3.2 billion takeover of rival Ladbrokes Coral.
A Sunday Times report established that the gambling operator gave away its Turkish business to a company, one of the co-owners of which is a business partner of Alexander in a stud farm. The report prompted suggestions that GVC and its boss might still be benefiting from the company’s former Turkish subsidiary.
In a statement issued Monday, GVC’s board of directors “categorically” refuted the suggestions and stated that it “has no activity either directly or indirectly linked to the Turkish market.”
The Isle of Man-headquartered gambling operator announced plans to purchase its rival Ladbrokes Coral in 2017. GVC was required to offload its Turkish operation as one of the conditions it had to fulfill before closing the multi-billion transaction that created one of the world’s largest online and retail gambling groups.
The operator announced in November 2017 that it would sell its Turkish business to Ropso Malta, a company that provided IT services to the operation in a €150 million, five-year deal. It later on became known that GVC waived the payment to clear an important hurdle before completing the Ladbrokes Coral takeover.
Ropso, which now operates as Dochandoris Limited, is co-owned by IT consultant Ron Watts. At the same time, Alexander and Watts are co-owners of the New Hall Stud farm in Ayshire, Scotland. The stud farm is owned by Kenron Ltd, a company which lists Alexander and Watts as its directors.
Why Alexander’s Alleged Turkish Involvement Is A Big Deal?
In its Monday statement, GVC said that the disposal of its Turkish operation was “subject to an arms-length competitive process” that was overseen by American investment bank Houlihan Lokey. The company further pointed out that it had fully disclosed the details of the disposal and that offloading its Turkish operation was a specific condition of its acquisition of Ladbrokes Coral.
With few exceptions, gambling is illegal in Turkey. According to an Associated Press report from last year, GVC had tapped a company that had also been used by porn websites and debt collectors to mask payments from unregulated and black markets, including Turkey.
GVC’s alleged involvement in its former Turkish subsidiary could harm its high US sports betting hopes. The company previously operating in that country could have cost it its recently obtained license in Nevada.
During a May hearing before Nevada gambling regulators, Alexander admitted to being “ultimately responsible” for their operations in Turkey and pointed out that his company has done and would continue to do what is required to ensure that its business is now compliant with rules. GVC was put on a two-year probation by Nevada regulators, after which its operations in the state will be reviewed and reassessed to establish whether it should be granted a permanent license.
The recent allegations of GVC still benefiting from the Turkish market could not have come at a worse time for the company. Earlier this year, it saw its shares plummet after Alexander and the operator’s outgoing Chairman, Lee Feldman, sold nearly £20 million of company stock on the same day.
The latest controversy surrounding the operator sent GVC’s shares down 7.1% to 629p.
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