Entain finds itself included in the legal dispute stemming from the acquisition of BetCity. BetCity is a Dutch-facing business. Initially, it appeared as a strategic move to penetrate the lucrative Netherlands market. However, now it evolved into a controversial issue. This includes Entain alleging noteworthy inconsistencies at the time of purchase, in BetCity’s value.
For €450 million or $572.15 million, the saga began in January 2023 when Entain acquired BetCity. BetCity is one of the pioneering licensees in the Netherlands. It presented a promising opportunity for the expansion of Entain in terms of reach and capitalize on the country’s evolving regulatory landscape.
Nonetheless, the previous revelations have cast a shadow over the acquisition. The undisclosed regulatory investigations surfaced post-puchase. Entain argues that it was blindsided by these investigations. It declares that BetCity’s past owners failed to disclose relevant information during the acquisition process.
Documents gathered by CasinoNieuws.nl showed light on the matter. It reveals that BetCity’s past owners signed statements that indicate their unawareness of any ongoing regulatory investigations. Nevertheless, following disclosures painted a different picture. This leads Entain to question the truthfulness of the information provided during the purchase.
Entain initiated legal proceedings against BetCity’s past owners in response to the alleged discrepancies. Sports Entertainment Media BV seeks compensation for the purchased diminution in BetCity’s value. And while the exact compensation it seeks remains undisclosed, Entain has outlined two distinct methodologies to estimate the financial impact of the undisclosed regulatory investigations.
The first calculation postulates that BetCity’s value may have plunged by €124 million or $157.6 million because of the heightened risks arising from regulatory violations. This assessment is the turning point on the assumption from regulatory infractions have exposed BetCity to increased legislative, operational, and reputational risks, thereby wears down its inherent value.
The second methodology suggests that BetCity could be worth up to €156 or $198.3 million less than initially assumed. This is a more alarming scenario.