Entain seeks damages from ex-BetCity owners

Over a year after Entain acquired BetCity.nl from its former owners, Sports Entertainment Media B.V. and a number of the Singels family members, who owned the company at the time, the entertainment giant is moving with legal proceedings against the same parties. The casus belli involves a failure by BetCity’s former owners to fully divulge regulatory proceedings levelled against the company prior to Entain initiating its review and buying of the business in the Netherlands, which was finalized in January 2023.

BetCity was targeted by the local regulator, the Kansspelautoriteit, who investigated the company over breaches of Dutch advertising law by targeting young adults with promotional materials related to gambling. A fine amounting to €400,000 was handed down to the company, with another one to follow as part of anti-money laundering and terrorist financing shortcomings, which resulted in a further €3m penalty.

The investigations relating to both accidents were launched in April and May 2022, while Entain only showed interest in buying out the business in June of that same year. The company was not aware of the regulatory proceedings against the buying target, and due diligence reports failed to show that such probes were afoot at the time.

In fact, Entain only learned that the investigations were ongoing in November 2022 when the Kansspelautoriteit made a public statement that two businesses had failed to comply with social responsibility and AML laws in the country, prompting Entain to swiftly reach out to BetCity and seek confirmation that the company was indeed not one of the two unnamed entities in the regulator’s public statement.

BetCity.nl, though, said that it was indeed one of the investigated companies. Although the full details are unclear, Entain and BetCity ultimately agreed that the latter would cover the costs associated with the fines, but Entain also noted that it could seek an additional claim if and when it finds appropriate.

The acquisition was finalized only a few months later on the following year, and Entain had mostly remained quiet on the issue until now.

A document obtained by CasinoNieuws.nl and widely reported by other industry publications indicates that Entain Holdings (Netherlands) B.V. filed a lawsuit with the UK Commercial Court. The court filings and document shared by CasinoNieuws.nl name SME and six members of the Singels family as the defendants, along with Robert Kooiman and Melvin Bostelaar, former Marketing Director and Chief Executive Officer respectively.

Entain asserts that the issue has caused reputational damage and is seeking "significant damages," although the exact sum of the claim is not outlined in the court documents obtained by the publication.

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