In January 2023, the gaming giant Entain completed its acquisition of BetCity for a hefty sum of €450 million (£383 million/$487 million), aiming to gain a foothold in the Dutch market, where BetCity held one of the initial 10 licenses.
However, the honeymoon period for this acquisition has been cut short as recent revelations have prompted Entain to file a claim for damages against BetCity.
According to a document obtained by CasinoNieuws.nl, Entain alleges that it was kept in the dark regarding two ongoing regulatory investigations against BetCity at the time of acquisition.
These investigations were being conducted by the Dutch regulator, Kansspelautoriteit (KSA). Entain contends that BetCity’s former owners had signed documents claiming they were unaware of any such regulatory probes.
However, it is now alleged that several BetCity employees were aware of these investigations but did not disclose this crucial information.
The consequences of these investigations resulted in fines imposed by the KSA on BetCity.
While the previous owners of BetCity settled these fines, Entain argues that the business’s valuation should have been lower due to these regulatory issues. Consequently, Entain is seeking financial compensation for this discrepancy.
The first investigation by the KSA began in April 2022 when BetCity was informed of its violation related to sending promotional emails to young adults, breaching Dutch law and incurring a fine of €400,000.
The second investigation commenced in May 2022, focusing on shortcomings in BetCity’s anti-money laundering and terrorist financing measures, resulting in a hefty €3 million fine.
Surprisingly, Entain only learned about these regulatory matters in November 2022 when they were published on the KSA website.
Following this discovery, Entain requested a meeting with BetCity to discuss compensation, which led to an agreement that the former BetCity owners would cover the cost of the fines.
However, Entain also reserved the right to submit an additional claim, which they have now pursued by filing the claim last month, though it only recently came to public attention.
Details regarding the specific damages Entain is seeking have not been disclosed, and the company has not yet commented on the ongoing case.
This development adds to the challenges faced by Entain, including the resignation of its CEO, Jette Nygaard-Andersen, and a significant financial settlement related to historic activities in Turkey.
Furthermore, the company has encountered downgrades from analysts and recently saw its joint venture, BetMGM, expand into the UK without Entain’s direct involvement.
Additionally, reports suggest Entain is exiting numerous unregulated markets, aiming for a more streamlined global presence.