In November 1994, Grobbelaar was accused by the British tabloid newspaper The Sun of match fixing during his time at Liverpool to benefit a betting syndicate, after being caught on videotape discussing match-fixing. He was charged with conspiracy to corrupt, along with the Wimbledon goalkeeper Hans Segers and Aston Villa striker John Fashanu, and a Malaysian businessman, Heng Suan Lim.

Grobbelaar pleaded not guilty, claiming he was only gathering evidence with the intent of taking it to the police. After two successive trials, in both of which the jury could not agree on a verdict, he and his co-defendants were cleared in November 1997. Grobbelaar later sued The Sun for libel and was awarded £85,000. The Sun appealed, and the case was eventually taken to the House of Lords where it was found that, though the specific allegations had not been proved, there was adequate evidence of dishonesty. The Lords slashed his award to £1, the lowest libel damages possible under English law, and ordered him to pay The Sun's legal costs, estimated at £500,000. In his judgement, Lord Bingham of Cornhill observed:

"The tort of defamation protects those whose reputations have been unlawfully injured. It affords little or no protection to those who have, or deserve to have, no reputation deserving of legal protection. Until 9 November 1994 when the newspaper published its first articles about him, the appellant's public reputation was unblemished. But he had in fact acted in a way in which no decent or honest footballer would act and in a way which could, if not exposed and stamped on, undermine the integrity of a game which earns the loyalty and support of millions."[3]

Grobbelaar was unable to pay the costs and was declared bankrupt.

In 2009 Grobbelaar appeared in a British television commercial for the Irish bookmaker Paddy Power, in which he is seen returning a losing stake to a punter.