Online gambling software provider Playtech PLC saw revenue rise 15% to €176.8m in H1 2013, despite this period containing only 3.5 months of contributions from the William Hill Online (WHO) joint venture. Playtech shed its 29% WHO stake in the spring after Hills’ CEO Ralph Topping tired of his junior partner’s quirks and exercised Hills’ option to take full control of the enterprise, for which Playtech earned a handsome €492m payday. Playtech’s earnings were up 3% to €94.3m over the first six months of 2013, but stripping aside the impact of the WHO exit, earnings were up a healthier 13%.
Outside of poker (which saw revenue fall 17% to €8m) and services (which fell 2% to €51.6m due to the WHO fallout), Playtech’s verticals were all in the black. Casino rose 26% to €90.2m, bingo gained 6% to €9.3m, sports was up 90% to €9.1m and videobet rose 10% to €5.7m. The sports surge is attributed to healthy gains from Playtech’s Mobenga mobile offering, as well as the late December launch of Gala Coral’s new sportsbook and new launches on the Geneity platform.
Playtech’s overall mobile revenue rose 151% to €13.8m, with mobile sports revenue up 92% to €7.9m and mobile casino up 339% to €5.2m. Mobile bingo revenue went from €100k to €700k over the past year and accounted for 7% of total bingo revenue. Playtech is keen to extend mobile’s reach to its iPoker Network, with a planned rollout of iOS, Android and HTML5 mobile poker products in the pipeline.
Asia’s share of Playtech’s overall revenue increased from 19% in H1 2012 to 24% this year, while European operations fell from 69% to 64%. Asia’s 41% revenue growth vastly outpaced growth in Europe (7%) and the rest of the world (21%). Sadly, that’s the total amount of info Playtech is willing to shed on its Asian operations, which the company has previously admitted involve supplying services to operators doing business with China and Malaysia, markets in which online gambling is expressly forbidden.
BUY, BUY, BUY
Thanks to its WHO payday, Playtech is sitting on a cash pile of €576.2m, even after paying off €69.2m in outstanding bank debts following the windfall. CEO Mor Weizer said Playtech “continues to seek opportunities to invest in other bolt-on acquisitions, along more strategic alternatives to grow and develop the business. Playtech is also “actively pursuing” European and Asian markets “that are or shortly will be undergoing regulatory change.”
Playtech insists that the US market “remains an opportunity” and the company “will consider targeting those states from which it believes the business will be commercially attractive.” Playtech appears to believe the New Jersey online gambling market is commercially butt-ugly, as Playtech recently ditched its stake in US online horse wagering operator Sportech. The UK-based racing and football pools firm already has a presence in the Garden State and 25 other US jurisdictions, which Weizer had previously touted as offering Playtech an easy entry point into the US.
Regardless of their relative attractiveness, Playtech may find its US opportunities slim, thanks in part to its hush-hush Asian operations. Other companies with serious US aspirations, including Playtech’s former JV partner William Hill, have been quietly disengaging from Asia’s grey/black markets, presumably with the intent of removing any potential roadblocks such activities might allow US gambling regulators to put in their path.
There’s also the not inconsequential matter of Playtech’s founder and largest shareholder Teddy Sagi (pictured above, using a smile as his umbrella) having served time in an Israeli prison after being convicted of fraud and stock manipulation in the 1990s. Sagi’s past was deemed sufficiently colorful to be raised by Nevada regulators last year when they were considering Hills’ application for a gaming license.
Playtech also announced that non-executive chairman Roger Withers would be stepping down following a board meeting on Oct. 9, although the seven-year Playtech veteran will stay on as a strategic advisor. Withers’ seat will be filled by senior non-executive director Alan Jackson and Playtech also intends to appoint an additional non-executive director at some point in the future.
