Ex-BetCity owners file counterclaim against Entain demanding €104m
FTSE 100 operator initially opened legal proceedings claiming the Dutch operator concealed two KSA investigations
BetCity’s former owners have launched a counterclaim against Entain, demanding €104m (£89.2m) as well as accusing the defendant of knowing about the two Netherlands Gambling Authority (KSA) investigations into the Dutch-licensed operator.
The FTSE 100 operator first launched a claim in the UK Commercial Court last December against seven members of the Singels family, former CEO Melvin Bostelaar and ex-marketing director Robert Kooiman, stating that BetCity management failed to disclose ongoing KSA reviews into the business.
This failure to disclose investigations led Entain to claim BetCity’s valuation had plummeted by up to €156m.
Entain completed the acquisition of BetCity – today the third-largest licensed operator in the Netherlands – in January 2023 for an initial consideration of €300m and a maximum purchase price of €850m.
However, the counterclaim, first reported by Dutch language industry news site Casino Nieuws, argued that BetCity was informed in both November and December 2022 that there were ongoing investigations into the firm being conducted by the KSA.
The first began when the regulator informed BetCity on 22 April 2022 that it was sending marketing materials to customers under the age of 24. The second investigation related to anti-money laundering (AML) failings, which were investigated from 4 May 2022 through to September 2022.
The domestic operator was slapped with a €3m fine in December 2023 relating to the AML shortcomings discovered by the KSA, four months after Bostelaar stepped down as CEO following open-heart surgery.
BetCity’s counterclaim also includes an email sent on 15 November 2022 to an employee who works as a senior associate in M&A and corporate development at Entain.
The email related to the AML investigations, as did a separate letter addressed to the defendants to give notice of a warranty claim relating to “failure of the seller’s group and/or covenantors to disclose the [AML investigation] to the buyer’s group”.
It also mentioned “at least one other ongoing KSA investigation” into the company.
The counterclaim also states that Entain said in a letter dated 10 December 2022 that it was “concerned” about the investigations, which would have meant the firm was “entitled not to purchase shares”.
Despite this, the acquisition was completed the following month.
The counterclaim also states that BetCity’s former owners are seeking just under €104m from Entain, broken up into €20,994,239 and damages of €82,943,855.50.
Led by interim CEO Stella David following the sudden departure of Jette Nygaard-Andersen in December, Entain reported in its full-year 2023 results earlier this month, which recorded that NGR for the Netherlands had slumped 12% year on year.
The fall was put down to the re-entrance of the market leader, Kindred Group’s Unibet, yet bosses also noted that the decline in H2 was “greater than expected” due to “further tightening of compliance measures” in the country.