CASINO

Ralph Topping’s Big Test

TAGs: IGT, Ladbrokes, Playtech, Ralph Topping, William Hill

Ralph Topping's Big TestIt will have been a week of mixed feelings for the William Hill staff and shareholders alike. The company’s end of 2011 financial report showed that the company continues to perform well with CEO Ralph Topping just about stopping one step short of claiming that the bookmaker is recession proof.

While Topping was more than happy to draw attention to the success experienced in retail shops, we all expected him to continue to ignore the ongoing questions about his company’s relationship with Playtech. But Topping shocked us all by coming out and admitting that the joint venture must be changed from its current form.

This is a painstakingly obvious point but one that still came as a surprise when it came straight from the horse’s mouth. It is effectively as close to an admission of a mistake as we’re likely to ever get from the Scot who is a veteran of the bookmaker and has been CEO since February 2008.

It is an admission that will have had many in the iGaming industry thinking very loudly to themselves “we told you so”. As soon as it emerged that talks were taking place early in Topping’s tenure with software suppliers Playtech there were more than a few suggestions that the bookmaker’s staff didn’t quite know what they were getting themselves in for. During their impressive rise to market giants, Playtech have not only built a reputation for providing excellent software but also for being rather ruthless when it comes to the more commercial side of things.

Still the bookmaker charged into the joint venture and in October 2008 had themselves a deal. It’s a deal which has seen them make plenty of good money as last week’s released figures continue to show. However the rumours of discontentment, staff boycotts, servers being secured by armed guards and ex-Mossad agents surfaced last year to the great surprise of absolutely no one. The comments made by Topping last week and at the end of last year show that while he may not have expected an argument, he’s certainly not going to back down from one. But he should certainly not be too hasty in distancing himself from Teddy Sagi, Mor Weizer and the rest of the Playtech crew.

Yes they may be a pain to deal with at times and will always argue their corner but you have to take into account the simple fact that they have helped William Hill to make money. Quite frankly, without the support of Playtech, William Hill Online would not be the operation it currently is. The Israeli pureplay company has used its online knowledge to make the William Hill brand competitive online. Something that it’s unlikely that Hills would have been able to do on their own.

If Topping needs any confirmation of this all he need do is look at the online failings of their biggest competitor Ladbrokes. Richard Glynn’s “galvanised” company have continued to struggle online and even took to making a deal of their own with Playtech. They say that imitation is the best form of flattery and that’s certainly what Ladbrokes were doing when they opened talks with Playtech about a potential deal. While that deal was shut down by Hills, they should take note of the signs from Ladbrokes.

Although Topping will be desperate to renegotiate his current deal with Playtech he may be forced to wait until the pre-determined date of October.

A Daily Telegraph article that broke the story back in October of last year even suggests that the trouble that has been experienced at WHO may have been a threat created by Teddy Sagi. A threat that meant unless William Hill pay a high price to buy Playtch out of WHO that trouble of this scale will continue to occur.

Even if Topping does negotiate a buyout many of the WHO staff will have an allegiance to Playtech and as a result the company may fail to see the profits it has become accustomed to since 2009.

It appears that William Hill are, for the time being, locked in a loveless marriage that they are desperate to get out of. But they should bear in mind that divorce isn’t exactly going to be an easy or cost effective solution. Despite this, it’s likely to be a solution that they’ll be forced to make.

IGT’s Major Mistake

Moving on from one iGaming deal that has turned sour to one that has a high chance of following suit. While IGT’s purchase of social gaming application Double Down Casino is unlikely to create the same sort of staff problems and drama that has been seen at WHO, it’s likely that this deal won’t be without its problems.

To begin with, IGT paid well over the mark, perhaps by more than double. Regardless of even this it’s hard to see how they’re going to make any significant return on investment from this deal. Even ignoring the astronomical price it’s hard to see why IGT, a B2B software provider, decided that it wanted to purchase a product which is customer facing. Perhaps it’s part of a strategy that we aren’t privy to yet but it’s already upset some in the iGaming business. The folks over at Mr Green reportedly enjoy a fairly close relationship with IGT. However this didn’t restrain them from telling the software provider exactly what they thought of the acquisition – most of which wasn’t positive.

While we certainly won’t have heard the last of the WHO situation, the powers that be at IGT will be desperate for us to hear much more about Double Down Casino – or else they will have made a very expensive mistake.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com