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Entain Issue Lawsuit against SEM for Undisclosed Compliance Issues

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Entain, the global online gambling company, has filed a claim seeking compensation from Sports Entertainment Media (SEM) for failing to disclose information during the purchase of the BetCity brand, part of BetEnt.

The acquisition of the BetCity brand by Entain was announced in 2022 and cost the entertainment company $484.2 million. The purchase was initiated in June of that year and took around six months to complete.

Entain says they believe former executives of BetCity and members of the Singles family failed to disclose details of ongoing investigations by KSA, the Dutch Gaming Authority, during the acquisition of the gaming operator.

The claim for compensation by Entain gives details that the two incidents of breaches of legislation investigated by the KSA had begun before the purchase of BetCity had started.

By these proceedings, the Claimant claims damages for breach of warranty and breach of covenant in relation to its purchase of Betent from SEM.

StatementEntain

KSA Hand Out Fines to BetCity Relating to 2022 Activities

KSA launched the first investigation after concerns that BetCity was emailing young adults with promotional content relating to gambling services provided by the operator. It concluded that BetCity had breached the guidelines on sending gaming promotions to minors and issued the operator with a fine totaling €400,000 ($433,000).

The second fine of €3 million ($3.2 million) handed out to BetCity from the KSA for gaming legislation breaches involved anti-money laundering (AML) and counter-terrorism financing violations.

Entain completed the purchase of the BetCity brand and found out about the KSA investigation in November 2022. The company reached an agreement with former owners SEM, who said they would pay any penalty issued by the KSA.

Part of the compensation claim lodged by Entain expresses that the company feels disclosure about non-compliance in one of Betcity’s jurisdictions would have affected the proposed acquisition and would have led to a lower purchase price.

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