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.
Dispute over service fee
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.”
Caliplay amended agreement
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.”
H1 Trading and Snaitech sale latest
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.
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