London-based gaming titan Entain is claiming damages from BetCity, a Dutch company it acquired last year. It alleges the company didn’t declare that it was being investigated for regulatory violations by the Dutch authority Kansspelautoriteit (KSA) at the time of its acquisition, iGaming Business reported January 29.
The acquisition of BetCity for €450 million (£383 million/$487 million) in January of 2023 gave Entain an entrée into the Netherlands market. The company was one of the first ten licensees in the market.
However, Entain recently discovered that BetCity has been the subject of two investigations by KSA. This came to light when CasinoNieuws.nl acquired a document setting out Entain’s complaint that it wasn’t told about the regulatory probes.
The former owners signed documents that stated they were not aware of any investigations, Entain asserts. It adds that several employees knew about the probe but kept that to themselves.
The investigations led to a fine being levied on BetCity, which the former owners paid. However, Entain claims this should have lowered the valuation of the company, and thus the price it paid.
Entain adds that KSA informed BetCity of one of the investigations in April of 2022, two months before Entain agreed to buy the company. This investigation involved sending promotional materials to young adults, a violation that resulted in a €400,000 fine.
The second probe was launched in May 2022, and also involved KSA informing the company. This violation related to anti-money laundering and terrorist financing and cost BetCity €3 million.
Entain claims it only found out about the cases when KSA published news on its website in November 2022. Later BetCity agreed to cover the fines, but Entain reserved the right to make additional claims, which did not happen until January of this year.
How much compensation Entain is seeking has not been revealed.
Entain has had its own regulatory issues, one of which led to the departure of CEO Jette Nygaard-Andersen. She left after Entain settled a case with the Crown Prosecution Service (CPS) over bribery in a subsidiary Entain had once operated in Turkey. Entain was penalized £585.5 million to be paid over four years.
