Entain alleges financial compensation from previous BetCity proprietors: Was legal action postponed to protect potential transaction integrity?
In January 2023, the British gambling giant Entain bought Dutch betting company BetCity for around €450 million. The agreement was finalized in June 2022, but it wasn't until November 2022 that the public learned that the Dutch Gambling Authority (Kansspelautoriteit) was probing BetCity and had levied fines. Now, Entain is aiming to recoup losses from BetCity's earlier bosses.
BetCity's ex-heads accused of making deceptive claims
As reported by gaming industry publication iGaming Business (English version), Entain is currently pointing fingers at BetCity's former management [article]. Entain asserts that these ex-bosses dishonestly concealed the Kansspelautoriteit's investigations to safeguard the deal. Exposure of the continuing probes could have led to a drop in BetCity's worth and hence the purchase price.
The former BetCity honchos had verified in documents from the company's June 2022 buyout that no active investigations encircled the Dutch betting provider. However, investigations against BetCity had started in April and May 2022 itself.
Ex-BetCity heads had to foot fines themselves
BetCity was hit with a €400,000 penalty for sending promotional emails to young adults. More significantly, the firm was penalized €3 million due to its failure to set up measures to curb money laundering and terrorism funding.
Although the fines were collected by the previous BetCity owners, Entain's management believes these penalties could have lowered BetCity's value. As a result, Entain is now seeking compensation.
Entain distancing itself from past issues
Following Jette Nygaard-Andersen's exit as Entain's CEO, the company seems to be embarking on a strategy of consolidation. Entain's historical expansionist growth approach has drawn flak from shareholders.
As a result, Entain decided to retreat from over 140 unregulated markets to avoid future legal disputes. Entain would benefit if hefty fines, like the nearly €674 million Entain needs to pay due to fraud allegations against its Turkish subsidiary, don't resurface.
The legal dispute between Entain and BetCity's former owners is still a work in progress. No specifics about the amount of Entain's compensation claim have been disclosed yet. Entain has yet to comment on the case.
Entain is alleging that BetCity's former management concealed ongoing investigations by the Dutch Gambling Authority, which could have impacted the purchase price. The ex-owners of BetCity were personally fined €400,000 and €3 million due to regulatory breaches, and Entain believes these fines could have reduced BetCity's value.
Read also:
- Leverkusen claims victory in the cup, securing a double triumph.
- Alonso achieves a double victory after consuming a German brew.
- Does the SVolt factory in Saarland face stability issues?
- Furor surrounding Sylt scandal footage