BetCity’s Former Owners Contest Entain’s Accusations in Major Lawsuit

The group of former owners for BetCity has responded to recent accusations made by Entain as part of an ongoing legal dispute. In 2022, Entain acquired BetCity before raising concerns about increased bonus costs and the viability of a VAT-exempt structure, claims which the previous proprietors refute.

BetCity Claim Undisclosed Investigations Were Known Before Acquisition

In a 13-page answer filed at UK Commercial Court, ex-BetCity owners justified their €104 million ($111,310,264) counterclaim against Entain, reported Casino Niuews.

This counterclaim was lodged in March after Entain’s December 2022 lawsuit where it accused the BetCity former owners of failing to disclose two investigations by the Dutch gambling authority – Kansspelautoriteit (KSA). The prior proprietors however said that these probes were known to Entain before the deal was sealed off.

According to former BetCity owners, there are two main issues under scrutiny: one being the €82.9 million ($88,737,818) reduction in the earn-out payment, which they attribute to what they describe as Entain’s poor business decisions post-acquisition but additionally, they claim they are owed €21 million ($22,478,820) for an Employment Tax Adjustment Payment. Entain has responded by indicating that it would make this payment only if it cannot secure a favorable judgment.

Dispute Over Bonus Spending and Tax Structure Escalates in BetCity-Entain Lawsuit

One area of disagreement is over the higher spending on bonuses in 2023. The ex-owners claim that Entain increased these costs single-handedly and without reference to pre-existing agreements. They state that talks about bonus costs took place in August 2023, during which Entain suggested a rise to offset the effect of the Dutch ban on untargeted advertising from July 2023. Nevertheless, they allege that while asking for approval, Entain had already spent too much money beyond what was agreed upon initially.

The former owners of BetCity also challenge Entain’s alleged assertion that they failed to respond properly to communication about the bonus costs.

They argue that the email from Entain’s CEO Vic Walia, which Mario Singels allegedly ignored, did not comply with the established communication protocols, and thus was not responded to. Additionally, they argue against the accuracy of Entain’s figures concerning the computation of bonus costs claiming it was wrong mathematically and lacked adequate justification.

Another key point at issue is the tax structure exempting VAT. According to Entain, this arrangement was illegal under Dutch tax laws and amounted to tax evasion. However, according to the ex-owners’ view, such a plan formed part of the business planning process as well as the sale agreement because it worked for international companies like Entain with offices in different jurisdictions including Malta and Gibraltar.