Withholding information
Entain’s recent struggles continue, with the gambling group revealing that it significantly overpaid for the acquisition of BetCity. It completed the €450m ($489m) purchase of the Dutch-focused business in January 2023 and it has subsequently come to light that the Amsterdam-based company was under investigation.
people within BetCity knew about the probes, but did not declare the information
Entain claims that numerous people within BetCity knew about the probes, but did not declare the information when asked. Kansspelautoriteit, the gambling regulator in the Netherlands, was leading these investigations.
Entain estimated in a legal document recently obtained by CasinoNieuws that BetCity’s value at the time of purchase would have been between €68m ($74m) and €156m ($169m) lower as a result of these hidden issues.
Taking action
Entain’s Dutch subsidiary filed a lawsuit in the UK Commercial Court in December to seek damages against numerous former BetCity shareholders, including members of the Singels family who previously held a majority stake in the company, former marketing director Robert Kooiman, and the previous CEO Melvin Bostelaar.
The KSA told BetCity about one of the investigations in April 2022 which related to sending marketing emails to young adults, a violation of Dutch law that led to a €400,000 ($434,540) penalty.
In the other investigation, which began in May 2022, the KSA informed the operator that it was looking at potential terrorism financing and anti-money laundering failings. This led to a €3m ($3.3m) fine in November.
the former management agreed to cover the fines
Entain says it only learned about these issues after seeing them on the KSA’s website in November 2022. It held a meeting with BetCity to discuss the matter and the former management agreed to cover the fines and also gave Entain the right to make an additional claim in the future.
A rough period
Entain revealed in June 2022 that it would acquire BetCity for €300m ($326m), which could then rise to €450m ($489m) based on various performance targets. It hoped to generate about €26m ($28m) in synergies by 2026 as a result of the transaction.
This is just the latest scandal involving Entain; its CEO Jette Nygaard-Andersen resigned in December on the back of some questionable acquisitions and a poorly performing share price.
