Ensconced within the luxury of his £30m Knightsbridge pad overlooking Hyde Park, the billionaire Teddy Sagi laid his cards on the table. “I have a big pair of balls,” he proclaimed, according to documents filed at the high court. “I lost £300,000 in the casino last night. I will buy your business for £53m.”

For the man on the other side of the negotiating table, the online gambling entrepreneur Simon Wilson, the stakes had never been higher.

Wilson was no minnow. He had shrewdly capitalised on the online gambling boom of the early 21st century, transforming his business In Touch Games (ITG) from a supplier of high street slot machines and jukeboxes into a thriving digital gaming company with almost 5 million customers and a sponsorship deal with West Bromwich Albion.

Now, though, he was contemplating the deal of his life, sparring with one of the betting world’s most fabled figures. Sagi boasts an estimated net worth of $6.4bn (£5bn), amassed chiefly through Playtech, the gaming software development company he grew from a small outfit founded in Estonia in 1999 into a global business.

The company was valued at £550m on its 2006 London stock market listing and its price tag had soared to almost twice that by the time the Israeli businessman cashed out the last of his shares in 2018.

Sagi has invested much of the proceeds of his share sales in property and now presides over a sprawling property empire, including north London’s bustling tourist mecca of Camden Market.

The Knightsbridge flat was only one of two pieds-à-terre he owned in the same prestigious luxury complex, a stone’s throw from Harrods, boasting a swimming pool, spa, valet parking and 24-hour security and concierge services. Between them, the two flats cost Sagi £57m, according to Land Registry records, more than his company was now proposing to spend on buying Wilson’s life’s work.

The opulent central London setting for negotiations made for quite the contrast with the functional office block in the West Midlands market town of Halesowen, where Wilson had built his business.

But in light of the claim filed at the high court by Gibraltar-based online gambling company Skywind, founded and owned by Sagi, it was the Israeli entrepreneur who should have been nervous.

The deal discussed that day in Sagi’s Knightsbridge flat is now the subject of an acrimonious legal dispute involving Sagi’s company, Wilson and Wilson’s estranged wife, Yu-Lin. Skywind’s claim, which the Wilsons deny, is that it was effectively hoodwinked into buying a company that had already been set on a path to oblivion due to an audacious fraud involving sophisticated forgery and old-fashioned physical threats.

In summer 2021, as much of the country was enjoying England’s progress to the final of football’s European championship, ITG was sweating. The hot breath of the Gambling Commission had been on its neck since 2017, when the regulator began an investigation that resulted, after two tense years, in a forced £2.2m settlement.

Despite the shot across its bows, ITG failed to clean up its act. In March 2021, the commission slapped the company with a second, harsher, punishment – a £3.4m fine coupled with an official warning.

Its transgressions included poor monitoring of whether online casino players might be suffering from a gambling problem, as well as lax money-laundering checks that did not assess the risk of customers using cryptocurrencies.

ITG was not alone in feeling the commission’s wrath. Amid mounting public concern about gambling companies exploiting the vulnerable, a watchdog that had long been derided as tame was finally baring its teeth. Heavyweights of the £11bn-a-year UK gambling industry such as William Hill, Sky Bet and Ladbrokes were on the receiving end of the regulator’s growing appetite for enforcement.

ITG might have been small by comparison but its sponsorship of West Brom, starting in August that year, was aimed at building its profile among football fans and coaxing them to try its online casino brands, such as Jammy Monkey, Dr Slot and Mr Spin.

As it pursued growth, ITG was relatively unusual in its apparent failure to turn over a new leaf after falling fall of the regulator; it required special attention.

The commission’s solution was to impose a third-party audit of the company’s paperwork. Risk management and consultancy group RSM UK was appointed in March 2021 to check that ITG was really doing everything possible to prevent problem gambling and reduce the risk of money laundering.

RSM’s audit was, according to Skywind’s claim, “critically important” to the company’s survival – and thus its value as a takeover target – because failure would have risked the loss of its gambling licence.

In the end, that fate was avoided. ITG passed the audit and RSM applauded its “positive direction of travel”, according to Skywind’s claim.

ITG appeared to have corrected its mistakes and was now on the path to rehabilitation, its gambling licence safe for the time being.

But according to Skywind’s high court claim, this story of redemption was an elaborate sham that put it – and by extension the entrepreneur – on the wrong end of a £53m deal.

Less than a year after the audit, Sagi arrived on the scene with his chequebook.He wanted money-spinning ITG brands such as Jammy Monkey, mFortune and PocketWin, online casinos that typically offer a reliable stream of income from fixed-odds games, where the house always wins in the long run. “You can sell it [ITG] to other companies for more money and they will take six months to do due diligence,” Sagi said at the Knightsbridge meeting, according to Wilson’s defence.

“I will buy it in 10 days and I won’t do any due diligence and I don’t want any guarantees or warranties.”

Skywind says the billionaire, who is not a party to the proceedings, does not recall using the words attributed to him from the meeting, adding that the company did, in fact, perform rigorous due diligence on the £53m purchase. But whatever words the billionaire used, the takeover via Skywind was sealed in relatively short order. From early discussions in mid-April 2022, the takeover was completed by June of that year, court papers indicate.

The deal began to turn sour within months. First, in January 2023, the commission hit ITG with the company’s biggest fine yet, a £6.1m penalty for failures that took place in March 2022, prior to the acquisition, relating to anti-money-laundering and responsible gambling. Sanctions might have been more severe, the regulator said, if ITG had not cooperated with the investigation. But there was more to come from the watchdog.

In August 2023, the Gambling Commission wrote to ITG, now under Skywind’s ownership. The regulator had received information suggesting ITG had “knowingly altered” documents in advance of that crucial favourable audit by RSM in 2021, the one that found ITG was improving its compliance measures.

Less than a week later, in a raid on the offices of ITG, which had by now moved to Birmingham, the commission found evidence that driving licences attached to customer accounts may have been forged on internal systems for the audit. ITG’s licence to operate in Great Britain was swiftly suspended. “The review and consequent suspension follows concerns that activities may have been carried out contrary to the [Gambling] Act, not in accordance with conditions of their licence and that the licensee may be unsuitable to carry on the licensed activities,” the regulator said.

“It is suspected the operator failed to follow licence conditions related to money laundering, fair and transparent terms and practices, and reporting key events.”

A few days later, ITG voluntarily surrendered the licence altogether, effectively shutting down its British operation. The seemingly lucrative business that Sagi’s company had paid £53m for just a few months earlier now had a value, Skywind claims, of “nil or nominal”.

Skywind’s case relies, in part, on whistleblowing claims made in early 2022 by a longtime employee of Ruskin Properties, a company within the Wilson business empire that also held shares in ITG prior to Skywind’s acquisition.

The whistleblower alleged that ITG staff had forged key documents, including bank statements and pay slips analysed by RSM during its audit. Simon Wilson had not only known about the forgeries, the whistleblower claimed, but had privately admitted that without them, it would have been clear to the auditors that some of ITG’s customers could not afford their habit or had a gambling problem.

What is more, the whistleblower also claimed that after he raised concerns about the alleged fraud, Wilson issued physical threats and made false accusations of criminal conduct against him.

Skywind was not entirely ignorant of fraud allegations when it bought ITG. Indeed, its claim states that Skywind’s executives discussed the whistleblower’s accusations with Wilson during takeover negotiations. But Skywind says its due diligence had not identified any fraud as it had been intentionally hidden.

And Skywind says that the Midlands entrepreneur dismissed the accusations as “untrue” and put them down to a personal grudge on the part of the whistleblower.

Skywind’s claim is that the commission’s intervention raid on ITG and suspension of its licence showed that the allegations were in fact accurate and that the Wilsons knew this when they sold him ITG.

“Skywind acquired ITG in good faith, having conducted thorough due diligence and in reliance upon express representations made by the original owners,” a spokesperson said. “However, an elaborate and detailed fraud which took place prior to the acquisition was deliberately hidden from Skywind.

“This fraud was uncovered with the assistance of specialist forensic accountants.”

The company highlighted the decision by another shareholder in ITG to voluntarily return their share of the sale proceeds to avoid legal proceedings, a move Skywind said indicated acceptance that a fraud had taken place.

“We are now seeking to recover the balance of our losses sustained on this transaction from the remaining sellers who we say were involved in perpetrating this fraud,” the spokesperson added.

The Wilsons deny the claims, in separate defences submitted to the court. Simon Wilson denies any improper activity and also disputes that there was no value in the business once its licence had been suspended.

ITG, he says, needlessly surrendered its licence and, in any case, Skywind is still making money from ITG brands and customers that it has absorbed into its own business.

Yu-Lin Wilson also denies any wrongdoing and says that any loss of value in ITG was down to mismanagement by Skywind, poor communication with the Gambling Commission and the needless voluntary surrendering of its licence.

Their defences are complicated by a dispute between the estranged couple. Simon Wilson alleges that his wife and the whistleblower were working together, motivated by personal aggression towards him.

Yu-Lin Wilson says her husband wrongly believed she was having an affair with the whistleblower and was therefore making “unfounded” accusations against both of them.

Yu-Lin Wilson continues to hold a personal licence to operate a gambling business, although her husband surrendered his in August 2022, according to Gambling Commission records.

The high court must now adjudicate in a dispute that aims to sift through the wreckage of a bitter three-way dispute between entrepreneurs who have made a living from gambling and, mostly, winning. All bets are off.

A spokesperson for Yu-Lin Wilson said it was not appropriate to comment on the detail of Skywind’s claim but that “Ms Wilson believes that the claims have no merit and is robustly defending them. She is confident that she will able to defend the claims successfully. When she does, she will seek her legal costs from Skywind”.

A spokesperson for Simon Wilson said: “We cannot comment while litigation is ongoing save to say that our client denies all of the allegations made against him.”