The serene luxury of Teddy Sagi’s £30 million Knightsbridge apartment became the unlikely stage for a high-stakes negotiation. In a bold move, Sagi, a billionaire known for his gambling empire, offered £53 million to buy ITG, a thriving digital gaming company.
However, what seemed like a prosperous deal quickly turned into a legal battleground. Skywind, Sagi’s firm, now alleges that it was misled into buying a company on the brink of collapse due to serious regulatory issues and fraudulent activities. The ensuing court battle has unveiled a complex web of conflicting claims and accusations.
Initial Negotiations
Israeli billionaire Teddy Sagi set his sights on acquiring a range of ITG brands, including Jammy Money, mFortune, and PocketWin. Sagi, known for his success with Playtech, saw potential in these brands and offered £53 million for the company. Simon Wilson, the online gambling entrepreneur behind ITG, faced one of the biggest decisions of his career. Wilson had transformed ITG from a supplier of high street slot machines into a digital gaming powerhouse, boasting nearly 5 million customers.
Sagi’s offer was made against the luxurious backdrop of his £30 million Knightsbridge apartment. He confidently declared, ‘I have a big pair of balls. I lost £300,000 in the casino last night. I will buy your business for £53m.’ This stark contrast in negotiation settings underscored the tension between the two businessmen. However, Sagi’s confidence might have been misplaced, as ITG’s issues were just beginning to surface.
Undermining the Deal
Skywind, Sagi’s Gibraltar-based online gambling company, now claims it was deceived into buying ITG, a firm allegedly destined for failure. According to the claim, ITG’s value was artificially inflated through fraudulent activities and physical threats. In 2017, the Gambling Commission began investigating ITG, culminating in a £2.2m settlement in 2019. Despite this, ITG did not rectify its practices and faced another £3.4m fine in 2021.
ITG’s infractions included inadequate monitoring of gambling addictions and insufficient anti-money laundering checks. The company’s apparent disregard for regulatory compliance ultimately led to harsher penalties. During this period, ITG pursued a sponsorship deal with West Bromwich Albion, aiming to expand its reach among football fans and boost its brand recognition.
The Crucial Audit
In March 2021, the Gambling Commission mandated an independent audit of ITG’s practices. RSM UK, a risk management firm, was chosen to ensure ITG was complying with regulations. This audit was crucial for ITG’s survival and its attractiveness as a takeover target, as any failure would jeopardise its gambling licence.
RSM UK’s audit concluded that ITG was on a ‘positive direction of travel.’ However, Skywind alleges that this favourable outcome was a result of manipulation. The high court claim states that ITG had fabricated documents and misled auditors. The audit’s success, therefore, was built on deceit, masking the true state of ITG’s operations.
By the time Sagi entered the picture in mid-2022, ITG appeared to be on the mend. The company’s gambling licence remained intact, and its brands continued to generate revenue. Sagi, eager to expand his portfolio, quickly finalised the deal without demanding the usual due diligence.
Deal Turns Sour
Not long after the acquisition, ITG faced its most severe penalty yet – a £6.1m fine in January 2023 for failures predating the takeover. This penalty was tied to inadequate anti-money laundering measures and neglect in addressing gambling problems.
The situation worsened in August 2023 when the Gambling Commission informed ITG, now under Skywind’s ownership, of new evidence suggesting document tampering. The commission discovered forged driving licences in ITG’s systems, prompting an immediate suspension of ITG’s licence.
In response, ITG chose to voluntarily relinquish its licence, essentially halting its UK operations. Skywind, having paid £53m for the company, now found itself owning a virtually worthless enterprise.
Whistleblower Revelations
Skywind’s lawsuit relies partly on allegations from a whistleblower within ITG. This individual claimed that ITG staff forged key documents and that Simon Wilson was aware of these actions. The whistleblower also alleged that Wilson issued threats and false accusations to silence him.
Although Skywind had been aware of some fraud claims during the purchase discussions, they were dismissed by Wilson as fabrications born out of personal grudges. Nevertheless, the Gambling Commission’s intervention validated these fraud claims, confirming Skywind’s suspicions.
Skywind asserts it was misled by Wilson’s assurances and that the true extent of ITG’s fraudulent activities was intentionally concealed. This deception, Skywind argues, rendered the £53m acquisition effectively worthless.
Legal Battle
Simon Wilson denies any wrongdoing and maintains that ITG still held value, despite its licence suspension. He contends that Skywind’s mismanagement and poor communication with regulators led to the company’s downfall. Meanwhile, his estranged wife, Yu-Lin Wilson, also faces accusations but denies any involvement in the alleged fraud.
The Wilsons’ defences are further complicated by their personal disputes. Simon claims that Yu-Lin and the whistleblower colluded against him out of spite. Yu-Lin counters this by arguing that her husband’s accusations are baseless and motivated by jealousy.
Amid these conflicting accounts, the high court must determine the validity of Skywind’s claims and decide who is accountable for the collapse of ITG.
Skywind’s Stance
Skywind maintains that it was deceived into buying a failing company. They argue that the fraudulent activities were hidden and that they conducted thorough due diligence based on Wilson’s assurances.
The company highlights that another ITG shareholder voluntarily returned their sale proceeds to avoid legal trouble, supporting the notion that a fraud had occurred. Skywind is now seeking to recover its losses from other sellers involved in the alleged fraud.
Future Outcomes
The court’s decision will have significant implications for all parties involved. Skywind hopes to reclaim its losses, while the Wilsons aim to clear their names and prove the business still holds value. The outcome will hinge on the high court’s assessment of the fraud allegations and each side’s responsibility.
The courtroom drama surrounding the £53 million gamble reveals the enormous stakes in the high-flying world of online gambling. The case demonstrates how a seemingly lucrative business deal can unravel under the weight of regulatory scrutiny and fraud allegations. As Skywind and the Wilsons square off, the high court’s decision will likely set a precedent for future acquisitions in the industry. The outcome will not only impact the involved parties but also send ripples through the gambling sector.