Playtech has amended its strategic agreement with Tecnologia en Entretenimiento Caliplay SAPI de CV, a Corporación Caliente SA de CV subsidiary, resulting in the company receiving over €150m in unpaid software and service fees.
The gambling technology company has also provided a trading update ahead of its interim H1 results being published later this month, stating that FY 2024 adjusted EBITDA is “slightly ahead of current consensus expectations”, as well as the latest on its potential Snaitech sale to Flutter Entertainment.
Caliplay is a joint venture operation between Playtech and Caliente in Mexico.
However, Playtech and Caliplay have been in a dispute for almost a year related to the commercial structure and entitlement contracts of the Mexican joint venture, with the long-standing legal challenge being referred to the courts of London and Mexico City.
Despite the disagreements, Playtech had previously stated that Caliplay was an important customer and that the two parties remained in an open dialogue. As such, an amended strategic deal has been agreed upon.
Mor Weizer, CEO of Playtech, commented: “During the past nine years, we have worked closely with Caliplay to create a successful and rapidly growing digital business in Mexico.
“The revised arrangements mark the beginning of an exciting new chapter that will build on the impressive progress to date, with a view to driving significant further growth for Cali Interactive in the future.”
Under the amended terms, Playtech will hold a 30.8% equity interest in Caliente Interactive, which will be the new holding company of Caliplay in the United States. Playtech will also be entitled to receive dividends alongside other shareholders in Cali Interactive, as well as have the right to appoint a Director to the Board.
In addition, the platform provider will enter into a revised eight-year B2B software licence and services agreement and will receive an additional US$140m from Cali Interactive, paid in cash over four years.
Caliplay has also resumed paying its software and services fees to Playtech, with more than €150m (over 80%) of the unpaid fees due from the Mexican brand having now been received. Paid into escrow, the balance will be released either on the closing of the revised arrangements – expected in Q1 2025 – or by the end of 2025 at the latest.
Playtech noted that the revised arrangements are conditional upon Mexican antitrust approval with closing expected in Q1 2025. An agreed standstill of all current legal proceedings between Caliente, Caliplay and Playtech is in place and once the revised arrangements come into effect, the proceedings will be dismissed in full.
“The agreement with Caliente and Caliplay underlines the attractiveness of Playtech’s leading proprietary technology,” stated Weizer.
“With a strong position in Mexico and exposure to other fast-growing markets in the Americas and Europe, we remain well-placed to deliver strong growth in our B2B business in the coming years.”
With the amended agreement in place, Playtech has received updated details on Caliplay’s financials, reporting that the operations are performing strongly in the first half of 2024.
Emilio Hank, Chair of Caliplay, added: “We are delighted to finalise this renewed agreement which shows the inherent strength of the strategic relationship between Caliplay and Playtech.
“We are focused on growing Caliplay, leveraging our core strengths and Playtech’s leading technology to broaden our geographical footprint, as we continue in our mission to give the best gaming experiences to our customers in Mexico and beyond.”
Playtech has also delivered a trading update ahead of the release of its interim H1 2024 results on 30 September.
The company noted that a “good trading performance” has been delivered during the period “with a broad continuation of the trends” from its AGM trading statement back in May.
In addition, 2024 adjusted EBITDA is expected to be “slightly ahead of current consensus expectations” thanks to a strong B2B performance which was “driven by a combination of revenue growth in the Americas and a focus on tighter cost control”.
Alongside the previously mentioned Caliplay performance, Playtech stated that “good strategic progress” continues to occur in the US and Canada with strong growth occurring from a small base, while Colombia is providing a “growing contribution”.
For B2C operations, the company reported that Snaitech is seeing “underlying growth” in wagers, despite being negatively impacted by customer-friendly sporting results in Italy.
Playtech also reflected on the potential sale of Snaitech to Flutter, noting that while discussions continue, there can be “no certainty that any transaction will ultimately be agreed, or as to its terms”, and that further announcements will be made as and when appropriate.
DraftKings has agreed to pay a $200,000 civil penalty after being charged by the US Securities and Exchange Commission (SEC) for selectively disclosing material, nonpublic information to investors via CEO Jason Robins’ social media accounts.
Within its release, the SEC noted that since the same information wasn’t disclosed to all investors, this violated Regulation Fair Disclosure, so a civil penalty was issued to DraftKings to settle the charges.
In an order dated 26 September, the SEC stated that on 27 July 2023, DraftKings’ public relations firm published a post on Robins’ personal X and LinkedIn accounts.
The X post read: “There’s massive potential for growth in new markets — but we’re still seeing really strong growth in existing states. Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1. With those numbers, we expect robust growth even without new states opening.”
A similar statement was also published on the DraftKings CEO’s personal LinkedIn account on the same day. Yet, at the time of those posts, the operator hadn’t published its second quarter 2023 financial results, nor had it otherwise publicly disclosed certain information contained in the posts.
Shortly after the posts were published, the public relations firm removed both posts at the request of DraftKings.
Following an SEC investigation, DraftKings was charged with violations of Section 13(a) of the Exchange Act and Regulation FD.
The order stated that even though DraftKings was required by Regulation FD to promptly disclose the information to all investors after it was selectively disclosed to some, the information was not disclosed to the public until seven days later when the operator’s Q2 2023 financials were published.
“Information about growth in sales as a public company can be extremely important to investors,” commented John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office.
“It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors.”
The SEC added that “while companies can use social media outlets to announce key information in compliance with Regulation FD, investors must first have been alerted about which social media will be used to disseminate such information”.
“Without admitting or denying the order’s findings, DraftKings agreed to cease and desist from future violations of the charged provisions, pay the civil penalty referenced above, and comply with certain undertakings, including required Regulation FD training for employees who have corporate communications responsibilities,” read the SEC’s statement.
