Gaming giant Entain acquired BetCity for €450m (£383m/$487m) in January 2023. The deal ultimately gave Entain access to the Dutch market, where BetCity was one of the initial 10 licensees.
BetCity has been operating as part of Entain for just over a year now. However, claims have now come to light that have led Entain to file a claim for damages against BetCity.
In a document obtained by CasinoNieuws.nl, Entain sets out that it was unaware of two regulatory cases against BetCity when it acquired the business. Both investigations were being carried out by the Dutch regulator, Kansspelautoriteit (KSA).
Entain said BetCity’s former owners signed documents saying they were not aware of any ongoing regulatory investigations. The filing claims several personnel at BetCity knew of the investigations but did not declare this information.
The two cases resulted in BetCity being fined by the KSA. While the former BetCity owners paid both of these fines, Entain is arguing that the business should have had a lower valuation as a result. As such, it is seeking financial compensation.
BetCity investigations began in April 2022
Entain agreed to acquire BetCity in June 2022. The claim states KSA informed BetCity of one investigation in April of that year. This related in BetCity sending promotional emails to young adults, which is in breach of Dutch law and resulted in a €400,000 fine.
The second investigation launched in May 2022, with KSA again making BetCity aware of the probe. This was in relation to shortcomings with anti- money laundering and terrorist financing measures. BetCity was fined €3m for such failings.
According to Entain, it only found out about these cases when news items were published on the KSA website in November of 2022. Entain then requested a meeting with BetCity to discuss compensation over the matter.
It was agreed that the former BetCity would cover the cost of the fines. However, it was also stated that Entain reserved the right submit an additional claim – something Entain later said it would pursue.
However, Entain did not actually file the claim until last month. The filing did not come to light until earlier this month, with CasinoNieuws publishing the document on its website late last week.
Details of the damages Entain is seeking have not been published. Entain is yet to comment on the case.
More controversy for Entain
The claim emerges in what has been a tricky period for Entain. Last month, Jette Nygaard-Andersen resigned as CEO of Entain, with the gambling group yet to appoint a permanent replacement. Stella David, currently a non-executive director is serving as interim CEO.
Nygaard-Andersen’s decision came just days after Entain resolved a long-running case with the Crown Prosecution Service (CPS). This relates to historic activities in Turkey.
Entain in December reached a final deferred prosecution agreement (DPA) with the CPS over the matter. This states Entain must pay a financial penalty and disgorgement of profits to a total of £585.5m. The business will also make a £20m charitable donation and contribute £10m to HMRC and CPS costs.
These will be paid in instalments and will run for a period of four years. The commencement date will follow from the final court approval.
As for other challenges, Goldman Sachs downgraded Entain to sell from buy in November amid concerns over business growth, particularly within its online division.
Meanwhile, BetMGM, the joint venture between Entain and MGM Resorts International, recently moved into the UK – but without Entain. MGM is instead working with LeoVegas, with the international platform utilising LeoVegas’ technology and platform.
Meanwhile, reports have emerged suggesting Entain will exit a large number of unregulated markets. The Financial Times says Entain will exit more than 140 markets worldwide such as Antarctica and Vatican City.
Entain will also reportedly be leaving other territories with a permanent human population of less than 1,000 people. These include the Pitcairn Islands, French Southern and Antarctic Lands and United States Minor Outlying Islands.
Original article: https://igamingbusiness.com/legal-compliance/legal/entain-damages-betcity-undeclared-regulatory-cases/
