Entain has taken legal action to claims damages against Sports Entertainment Media (SEM), the former owner of BetEnt (BetCity) following its acquisition of the brand in 2022.
The acquisition of BetEnt, trading as BetCity in the Netherlands, came to $484.2 million. The deal was first announced in June 2022 but took about six months to finalize.
However, Entain has now launched legal proceedings against SEM, along with members of the Singels family and past executives of the Dutch firm. Entain accuses the defendants of failing to disclose vital information about two inquiries by the Dutch gambling regulator, the KSA, for non-compliance involving BetCity.
These events trace back to 2022 prior to the acquisition. Entain alleges that BetCity’s executives, who knew about the violations, failed to report them in formal documents. One investigation by the KSA focused on the brand’s practice of sending promotional emails to young adults, resulting in a €400,000 ($433,000) penalty for BetCity.
Another investigation concerned anti-money laundering (AML) and counter-terrorism financing violations. The KSA began this probe in May 2022, leading to a €3 million ($3.2 million) fine for BetCity.
News of the lawsuit was first revealed earlier in January, but new documents published in local media shed some light on the case. Entain’s legal filing states:
“By these proceedings the Claimant claims damages for breach of warranty and breach of covenant in relation to its purchase of Betent from SEM.”
In November 2022, Entain found out about the KSA investigations involving BetCity. Consequently, Entain and SEM agreed that SEM would cover any fines related to these probes. Entain also reserved the option to make additional claims against the former owners for breaching the warranty.
Entain believes these undisclosed issues should have influenced the acquisition price, leading to a lower purchase price. However, specific details about the company’s claim for damages have yet to be disclosed.
Gambling industry journalist with a background in online poker and trading. Covering the regulated U.S Sports industry and the exciting world of online poker.