BetCity’s Former Owners Challenge Entain’s Accusations in Court
The previous owners of BetCity have issued a detailed response to recent allegations from Entain in their ongoing legal dispute.
Entain faces counterclaims from BetCity’s previous owners over acquisition disputes.
LISTEN TO THIS ARTICLE:In 2022, Entain acquired BetCity, later expressing concerns about rising bonus costs and the sustainability of a VAT-exempt tax structure, which the former owners dispute. In a 13-page document filed in the UK Commercial Court, the former BetCity owners presented their €104 million counterclaim against Entain. This counterclaim emerged in March following Entain’s lawsuit in December 2022, accusing BetCity’s previous owners of failing to disclose two investigations by the Dutch gambling authority, Kansspelautoriteit (KSA). However, the former proprietors assert that Entain was aware of these investigations before finalizing the deal.
The former owners have highlighted two major issues: an €82.9 million reduction in the earn-out payment, which they attribute to Entain’s poor business decisions after the acquisition, and an additional €21 million they claim is owed for an Employment Tax Adjustment Payment. Entain has stated it would make this payment only if a favorable judgment is not obtained.
Escalating Disputes over Bonus Spending and Tax Structure
One major point of contention is the increased spending on bonuses in 2023. The ex-owners argue that Entain raised these costs without adhering to prior agreements. They mention discussions in August 2023, where Entain proposed an increase to counteract the impact of the Dutch ban on untargeted ads from July 2023. Despite seeking approval, the ex-owners claim Entain had already exceeded agreed-upon spending limits.
The former BetCity owners also contest Entain’s claim that they failed to respond adequately to communications regarding bonus costs. They assert that an email from Entain’s CEO, Vic Walia, which Mario Singels allegedly ignored, did not follow established communication protocols, thus justifying the lack of response. Moreover, they dispute the accuracy of Entain’s calculations regarding bonus costs, labeling them as mathematically incorrect and unjustified.
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Debate over VAT-Exempt Tax Structure
Another critical issue is the tax structure exempting VAT. Entain argues that this arrangement violated Dutch tax laws and constituted tax evasion. In contrast, the former owners contend that this tax strategy was part of the business planning and the sale agreement, as it was suitable for international companies like Entain with operations in multiple jurisdictions, including Malta and Gibraltar.
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