SEC Fines PokerStars Owner Over Russian TiesPenalty Stems From Efforts To Legalize Poker |
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The Securities and Exchange Commission charged Flutter Entertainment with books and records and internal accounting controls violations arising out of the company’s use of third-party consultants in Russia.
Flutter is an Ireland-based global gaming and sports betting company and the owner of PokerStars.
According to the SEC’s order, between May 26, 2015 and May 15, 2020, while the company’s shares were registered with the SEC, the company paid approximately $8.9 million to consultants in Russia in support of the company’s operations and its efforts to have poker legalized in that country.
The SEC’s order further finds that, during this time period, the company “failed to both devise and maintain a sufficient system of internal accounting controls over its operations in Russia with respect to third-party consultants and to consistently make and keep accurate books and records regarding its consultant payments in Russia.”
According to the order, “contemporaneous emails indicate that those payments covered, among other things, (i) reimbursement for New Year’s gifts to individuals, including Russian government officials, which relevant company policies prohibited, and (ii) reimbursement of a consultant’s payments to Roskomnadzor, the Russian state agency responsible for administering internet censorship filters.”
Without admitting or denying the findings, Flutter agreed to cease and desist from future violations. Flutter further agreed to pay a penalty of $4 million. The SEC’s order noted Flutter’s cooperation and remedial efforts, as well as Flutter’s subsequent withdrawal from the Russian market following Russia’s invasion of Ukraine in early 2022.
The war in Ukraine was still raging on as of early 2023.
The government said that revenues originating from users in Russia were a significant source of revenue for PokerStars. Russia was a so-called “gray market” where poker was neither affirmatively permitted nor explicitly prohibited.
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