
The UK’s Financial Reporting Council (FRC), Britain’s accounting watchdog, has launched an investigation into KPMG's audit of Entain plc's 2022 financial statements, adding another layer of scrutiny to both the accounting firm and the wider iGaming industry. The probe, announced on January 20, 2025, comes under the FRC's Audit Enforcement Procedure and will be conducted by its enforcement division. While specific concerns have not been disclosed, the investigation highlights ongoing regulatory and financial challenges within the industry.
A High-Profile Case Impacting the iGaming Industry
Entain, a leading name in the iGaming industry with well-known brands like Ladbrokes, Coral, Sportingbet, and more, has been at the center of legal and financial controversies. In 2023, the company reached a £585 million settlement with HM Revenue and Customs (HMRC) over allegations of bribery linked to its former Turkish operations (2011–2017). This settlement, part of a Deferred Prosecution Agreement (DPA), enabled Entain to avoid criminal charges while committing to compliance conditions.
Despite this resolution, Entain has continued to face fallout, including a civil suit from investors seeking over £100 million in compensation for alleged failures to disclose critical information regarding the bribery investigation. These controversies, coupled with the FRC's latest investigation into KPMG, have cast a shadow over the company's recent financial reporting and its role in shaping trust within the iGaming industry.
KPMG’s Challenges and the Bigger Picture
The investigation into KPMG's audit of Entain comes at a time when the Big Four accounting firm is already grappling with reputational damage. KPMG has faced numerous scandals in recent years, including its role in the 2018 collapse of Carillion, a British construction giant. This led to a £21 million fine in 2023 for what regulators described as “textbook failures” in auditing practices. Similar shortcomings have been reported in audits for clients like Rolls-Royce and BNY Mellon.
KPMG has been Entain’s external auditor since 2018, and the current probe raises questions about its oversight during the company’s most challenging periods.
A spokesperson for KPMG stated:
"We will cooperate fully with the FRC to conclude this matter as quickly as possible."
Entain has declined to comment on the investigation or its potential connection to the above-mentioned bribery case.
While neither KPMG nor Entain has confirmed if the investigation is directly tied to the bribery case, the timing suggests a connection. This scrutiny further underscores the need for transparent auditing practices in the iGaming industry, which relies heavily on trust and compliance to maintain its reputation.
What This Means for the Future of Auditing in the iGaming Industry
As iGaming continues to expand globally, regulatory oversight is becoming increasingly stringent. From financial reporting to operational transparency, companies must navigate a landscape where lapses in compliance can lead to significant penalties and reputational damage.
The FRC's investigation into KPMG highlights the importance of robust auditing practices, particularly for key players in the industry. With high-profile scandals and substantial financial settlements making headlines, stakeholders are demanding greater accountability from companies and their auditors.