It was back in 2020 when the gaming and entertainment giant, Flutter Entertainment, purchased PokerStars from The Stars Group. This deal expanded further the brands owned by Flutter but brought unexpected consequences, a report released by the US Securities and Exchange Commission (SEC) reveals. On Monday, the SEC issued a statement claiming that it uncovered that the previous owner of PokerStars, The Stars Group (TSG), allegedly completed payments to third-party consultants in Russia.
The payments of approximately $8.9 million, allegedly were completed between May 26, 2015, and May 15, 2020. Those payments, according to the SEC, sought to support the legalization of poker in Russia, thus paving the way for PokerStars. The SEC alleged that during the period, the company did not maintain “a sufficient system of internal accounting controls over its operations in Russia with respect to third-party consultants.” Allegedly the payments in the country were used for Russian government officials New Year’s gifts and settle payments to the Russian regulatory body in charge of censorship filters of the internet, Roskomnadzor.
Matter Resolved via Cease and Desist
According to the SEC, the alleged payments represented a breach of the Securities Exchange Act of 1934. In light of the allegations, the SEC and PokerStars’ new owner, Flutter, agreed to resolve the issue via cease and desist. Flutter did not admit, nor deny the claims of the SEC but has agreed to close the matter and pay a $4 million penalty. Still, the Commission acknowledged that Flutter has engaged in remedial action and cooperated on the matter. Moreover, in light of the invasion of Ukraine, the company also withdrew from Russia early last year.
“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,“
explains a statement released by the US Securities and Exchange Commission
A spokesperson for Flutter deemed the allegations as a “legacy issue” from a period before the company owned The Stars Group. The spokesperson explained that after Flutter acquired TSG it implemented changes to ensure compliance with its high standards.
Recently, PokerStars announced it extended its partnership with Oracle Red Bull Racing. The refreshed collaboration came just in time for the start of the new Formula 1 season and is expected to deliver benefits for the duo.