Activities by licensees serving Malaysian punters is credited with contributing 8.4% of Playtech’s gross income in 2011. Here again, Playtech claims local lawyers suggest there is “some ambiguity” in Malaysian anti-gambling laws, although the country’s Common Gaming House Act contains prohibitions on “those who care for and manage or in any manner assist in the care and management of illegal common gaming houses.” Both the question of whether online gambling falls under the definition of a gaming house or whether these laws would have extraterritorial effect “remains untested.” Again, the main risk is borne by Playtech’s licensees, although any interruption in their activities would obviously impact Playtech’s bottom line.
The final potential danger zone, Germany, accounted for 7.7% of Playtech’s 2011 income, but the imposition of the new federal betting tax and the new interstate gambling treaty could compel “a number” of Playtech’s licensees to exit the market. Playtech’s Merkur Interactive joint venture with local gaming machine maker Gauselmann would not be affected.
While Playtech’s involvement in unregulated Asian markets hasn’t exactly been a secret, this public admission could nonetheless diminish the company’s chances of passing suitability tests by gaming regulators in Nevada, where Playtech has applied for an online poker tech provider license. Gaming Commission members had some pointed questions regarding Playtech’s joint venture relationship with William Hill – and Playtech founder Teddy Sagi’s mid-90s stint in jail for stock manipulation – at Hills’ sports betting license application hearing last month, and promised more probing questions when Hills’ online poker application comes to the top of the pile. Playtech believes such concerns are a non-issue, noting that if it can pass muster with the gatekeepers of the London Stock Exchange, Nevada gaming regulators shouldn’t pose a threat. We’ll see.