GVC Holdings announced in a press release yesterday HM Revenue & Customs (HMRC) is widening the scope of its investigation into the dealings of the group related to its online gambling business in Turkey, which the owner of Ladbrokes sold in 2017.

Widening the Scope of the Investigation

A probe which started in November 2019 and was understood to be directed at a number of former third party suppliers, relating to the processing of payments for the Turkish online gambling arm of GVC, is now turning into a “potential corporate offending” investigation, GVC Group was informed by the HMRC.

The taxman did not provide any further detail as to which division of the gambling group was suspected of violation of section 7 Bribery Act 2010, and the way the investigation was extended without providing clarity to its scope came as a surprise to the owner of Ladbrokes. The operator, though, re-iterated its stance that it would continue to cooperate fully with the HMRC and provide all the requested information.

The Turkish business was offloaded by GVC Holdings in 2017, after several reports emerged showing the concern among investors regarding the risk of having operations in a country where online gambling was illegal. The gambling firm was sold for €150 million to its IT provider, Ropso Malta, which investor list includes Ron Watts, a former partner in a Scottish stud farm with Kenny Alexander, GVC’s CEO by that time. Shortly after the Turkish gambling subsidiary was offloaded, GVC acquired Ladbrokes Coral in a £3.6 billion deal.

Alexander’s Legacy, Segev the Successor

The news about the deepening of the investigation comes after recently GVC Holdings’ CEO Kenny Alexander surprisingly announced his retirement from the position. After more than 13 years at the helm of the company and having spent the last months working from home, Mr. Alexander reevaluated his priorities and decided to dedicate more time to his family. Kenny Alexander was the man who turned GVC from AIM-listed gambling minnow to a FTSE 100 company represented on 5 continents and his successor, former COO Shay Segev, faces a huge challenge to fill his boots.

GVC Group was not the only one surprised by the decision of the HMRC to widen the scope of its investigation into the company, as the uncertainty surrounding the lack of details pushed investors into offloading GVC’s stock. After the announcement the share price of GVC Holdings sank more than 100 points, to 770p, wiping out more than £370 million of the market valuation of the group, making it the worst daily performer at the FTSE 100.