Playtech admits to Sciplay deal restructure
Software supplier admits deal terms with former exclusive US joint venture parttner Scientific Games have changed, confirming eGaming Review's revelation yesterday.
Playtech has admitted its US joint venture with Scientific Games has broken down, confirming eGaming Review’s exclusive revelation yesterday.
Despite refusing to comment when given numerous opportunities to do so, the software supplier admitted during its fourth quarter results announcement this morning that the terms to its two year-old Sciplay had been reduced to a non-exclusive agreement and that the relationship had been restructured to make way for a simpler supplier relationship”.
Overnight Scientific Games’ share price fell by almost 10% on the news with executives at the lottery supplier understood to be “upset” that the formerly exclusive deal had changed many holding the belief that the JV put them in a strong position to exploit the US once it regulates.
Playtech’s share price was more resilient; however it was down close to 5% despite today’s announcement that it had signed two new joint venture agreements in Germany and South Africa.
In a statement released late last night Scientific Games attempted to play down the significance of the break-up of a formal joint venture saying that that under the redefined agreement Playtech would continue to license its software to Scientific Games on a mutually non-exclusive basis for use by “certain categories” of its current and prospective customers, including US casinos and lotteries worldwide.
“This restructured arrangement seeks to replicate the successful strategic relationship that Scientific Games’ Global Draw subsidiary and Playtech have in place for use of Playtech’s Videobet technology for server-based gaming machines.”
The statement added that both companies “anticipate entering into additional documentation” in the coming weeks to further detail certain aspects of the arrangement.
Speaking to eGR this morning Mor Weizer, CEO of Playtech, deflected the significance of the restructure by describing it as a “sensible reflection” of the changing nature of the opportunities and the expansion of the potential scope of its relationship with Scientific Games.
“The terms of the deal have changed but in fact this extends our relationship beyond just lottery to casinos as well.”
In a statement this morning he added: “The flexibility this affords both parties will also ensure we can both work in the most effective way. We will look to work together as we both recognise that a number of key opportunities are outside the initial arrangement. It should also be noted that the formal joint venture structure had certain limitations and accounting complexities which we will no longer experience.”
He added that he has an “enormous amount of respect” for Scientific Games and said this extended to a close friendship with a number of its executives including long-serving chairman and fellow Sportech board member Lorne Weil. Playtech owns 10% of Sportech, while the UK based operator acquired Scientific Games Racing in later 2010.
Scientific Games, however, despite suggesting that Sciplay would remain in place, admitted that the redefinition of terms “effectively replaces” the Sciplay joint venture as the vehicle through which the two parties can collaborate on egaming projects.
It added that Sciplay-related entities would now become “wholly owned subsidiaries of Scientific Games”, but failed to mention any further detail on the future of its deal with the California Online Poker Association (COPA) and its free-play poker website Calshark. Weizer told eGR that the COPA deal remained in place and that other similar deals could occur in the coming months as a number of other US states look to capitalise on a renewed effort to regulate online poker.
“We believe that our restructured arrangement with Playtech preserves the business and strategic rationale of the Sciplay joint venture and even expands its scope “ to be able to offer a powerful combination of Scientific Games’ proven ability to provide comprehensive solutions to lotteries and other operators and Playtech’s leading internet gaming technology,” said Rick Weil, CEO of Sciplay.