by Kajetan Sawicz

BetCity and Entain Locked in €104m Legal Showdown

In a dramatic twist to an ongoing legal battle, the former proprietors of BetCity have launched a €104m counterclaim against global betting giant Entain. This legal skirmish traces back to Entain’s acquisition of BetCity in June 2022, a deal now mired in controversy and accusations from both sides.

The Genesis of the Dispute

Entain initiated legal action against BetCity’s former owners earlier this year, alleging that crucial information regarding an investigation by the Netherlands Gambling Authority (KSA) was withheld during the acquisition negotiations. This oversight led to Entain incurring significant damages, including a €3m penalty for anti-money laundering and counter-terrorist financing failings, and an additional €400,000 for marketing violations imposed on BetCity.

However, in a bold counter-move, BetCity’s former owners assert that Entain was fully aware of the KSA investigations during the acquisition phase. They claim that despite this knowledge, Entain chose not to amend the terms of the share purchase agreement. This assertion is supported by documented communications between the parties, including emails, phone calls, and face-to-face meetings.

Financial Implications and Operational Changes

The counterclaim also highlights the operational adjustments Entain made post-acquisition, which purportedly led to BetCity’s financial performance falling short of projections. This shortfall not only diminished the value of BetCity but also resulted in a significantly reduced earnout payment to the sellers, amounting to a loss of €82.9m.

Additionally, the former owners are seeking a €21m adjustment for employment taxes, bringing the total claimed damages to €103.9m.

Our Comment on the Article

The legal battle between BetCity’s former owners and Entain underscores the intricate and high-stakes nature of mergers and acquisitions in the iGaming industry. This case highlights the paramount importance of transparency and due diligence in such transactions, especially when regulatory scrutiny is involved. As the industry continues to navigate complex regulatory landscapes, this dispute serves as a cautionary tale about the potential pitfalls and the need for clear, open communication between parties in business deals. The outcome of this case will likely have reverberations beyond the immediate parties involved, offering valuable lessons for the broader iGaming community.

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