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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
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Hello, my name is Victor Kayed, senior journalist at SBC News. And today I'm joined by Ted Minmure, SBC content director, to discuss Playtech's latest results. But first, fresh back from Lisbon. I was going to say from holiday, but it wasn't much of a holiday. I wanted to ask you, Ted, first of all, how are you? Did you manage to recover from Lisbon? And how did you find the conference? As a holiday, it was very much a conference for me. Uh, I have, I've never walked, uh, as much as I have. I was such, uh, was such, such a distance in my life. I, uh, I blame Andy and Ranz for that. Right. Did you get blisters as well? I think we all got blisters. Yeah. Yeah. Part of SBC. That's one thing I brought from Lisbon besides the, besides the magnets and the souvenirs I brought blisters as well. So for me, it was very intense. I imagine it was for you. It was the same for you. Yes. It was, it was full on blister gate for me from start to finish. But very eventful. Uh, I think we both would agree on that. Very invi... Uh, eventful, very insightful. And, uh, while we were there. A bunch of things are happening in the market, news as we know never slip. And now we're going to talk about Playtech's results, which came out recently. So just to brief you in, recognized as the old boy of iGaming PLCs, Playtech has captured industry headlines following positive commercial developments and clever deal making. This Monday, the E-Listed gambling group announced its H1 interim results, assuring investors that it is on track to meet its 2024 EBITDA targets. The mood is upbeat as Playtech confirmed that it has resolved its long-standing services dispute with its Mexican joint venture, Calipay. Elsewhere, investors will be rewarded with a dividend of 1.7 billion euros following Playtec's successful premium sale of its Italian business Snitec. The deal will see Playtec return to its roots as an iGaming technology supplier in which it targets accelerated growth in the Americas, as Playtec shows that an old boy can learn new tricks. So, right into my first question, Ted. Following longstanding audios, it's been a month of good news at Playtech, of course. So let's recap on what is happening. So, Victor, as you said in your summary, Playtech has been the industry's headline grabber this September. Prior to announcing its H1 results, the board issued an update stating that it had reached a settlement on its near kind of two-year dispute related to CaliPlay joint venture it has with Mexico's Grupo Caliente. The longstanding dispute had dragged on Playtech's share price and somewhat derailed its North and South American ambitions and strategy. Moving forward, Playtech will now hold a 30% equity in the Mexican joint venture and it is promised to receive 150 million euros in settlement of services fee from CaliPlay. Finally, further positives saw Playtech secure a premium 2.3 billion sale on its Snitech Italia B2C asset, which it sold to Flutter Entertainment PLC. So to summarize, things are looking up well for Playtech as it returns to its core function or core business of B2B tech systems. CaliPlay, that's all I'm hearing about. So how important is the CaliPlay resolution in Mexico for Playtech and its ambitions? So look, CaliPlay should be looked at Playtech's kind of platform or Playtech's blueprint for how it believes it will expand its business within regulated or soon to be regulated markets in South America. We've got to remember that. as a joint venture, it's relatively new. It started back in 2020. And what we saw is Playtech essentially take over the tech stack of Grupo Caliente, who are very much a land-based casino group in Mexico. The performance and figures of the joint venture have been very impressive, even tracking back from 2021 to now. It's become Playtech's biggest B2B contract, even above its European tier one partners. That really underlines the potential for growth and the potential for expansion. When we look at Playtech's strategy in the Americas, you can say it's been late to the North America's party. What Playtech's coming in with is that it has a reliable tech strategy. It has just taken somewhat of a different route to market. I think it's going to become interesting developments for Playtec coming ahead in those markets. Talking about the Americas specifically, do you think that it can take top spots in the value chain there? Look, Playtec is going to return back to its B2B call functions, having removed, having sold Snytech for 2.3 billion. Platic has eyeed the North American market for a number of years, but its strategy has been somewhat conservative. I think that in terms of its valuation and retaking that B2B spot, the Americas is key. It knows that is the market where it's likely to get its next set of tier one operators, its most lucrative contracts, but also contracts that not only want its platform, but it wants its underlying services. What we're seeing is, again, Playtick is up against the contrast of Western markets, i.e. Europe versus new markets, i.e. South America. And I think that it wants to become the number one, or all services included, platform provider for that region. And I think it will take, will view each market individually, whether it's Colombia, Mexico, or Brazil. Playtick's got everything to play for. What about the sale of Snytech in the country and what it will recoup, do you think? For me, having analyzed the Italian market for a number of years, Playtech is divesting Snytech at the right moment as the Italian gambling undertakes or is at the forefront of its generation reorganization. The sale of 2.3 billion euros reflects, I think, an X9 or X8 jump on Snytech's or beta earnings for 2023. And many have questioned Playtech, why Playtech had a B2C unit. But on reflection, actually, Snytech has been an incredible investment for the company. Snytech did take market share under Playtech's ownership. And in comparison to the company's other investments during that period of the 2000s, it performed much better. Playtech sells Snytech. at a premium from an investment of 300 million euros. That's an incredible return. And best of all, it's been able to reward its shareholders. On that note, there seems to be investor harmony in the company. How important is that? Well, a 1.7 billion dividend helps. Right. It's good for the money. And to be truthful, man, good for management for putting that reward back to investors. I believe that Playtech's issues is not about financing its business. It's about platform and technologies are battle tested. I believe that they can go to any market and scale up. For me, the question for Playtech is, can it add secondary components or secondary services to platform provisions that will be taken on by tier one operators as its customers? I also believe that the shareholders, and this is known for a while, they wanted to Playtech to kind of simplify its business model. It believed that it was too big a technology group working over too many business segments. And it really called for the management to kind of rework and reorganize the group. And Playtech's reorganization, it hasn't been a short-term thing. I mean, we can reference back to five or six years that this has undertaken. By reorganizing and... for example, the Selling Snytek, it kind of goes into a direction where I think B2C for play takes place less overall than it used to play. So in terms, can shedding its B2C wings return the company to lofty heights and valuations of the 2000s and the early 2010s? Good question. Again, there's always kind of speculation why would a company like Playtech, who are very good at the technology aspect, want a B2C element? I think when they could prove that they could run a B2C company in Snitech, and I think they did that very well. Going back to what I said, I believe that it's selling Snitech at the right time with what the Italian market will be undertaking in the coming months. Now I think that if you're looking at the valuation of Playtech compared to where it 2010s, it's a very different market now. I think that the investors are looking at which operators have got good underlying of betas, good underlying contracts. Also, the valuation of a technology group is completely different. I think that the days of where you got these big monolithic technology groups that just acquire and acquire components, I think that the valuation for investors is now going back to... How efficient are these guys? How good are they at launching and helping partners go to market? And I believe that if Playtech, we've got a great platform, can do that, but add secondary systems on top of that, help them throughout that value chain. I believe that its valuation will go up and I believe it will be one of the fastest movers back in the iGaming space. So it's definitely one to watch, but it's really the ball is in their court now. Yeah, lots of big changes happening, but do you think that the path forward will really have no drama for Playtech? Look, from my perspective, and they always ask me about this, I don't mind the drama for Playtech. I think they're a very interesting company to write about. And from my kind of journalistic response would be is that, you know, I love a mad company to write about and I love a company that takes risks. Yeah. Patek haven't really been that conservative and I hope they keep that way. Yes, they're returning back to their B2B origins. But I think if they undertake an aggressive market strategy in North and South America, I think that we want to watch. I won't be surprised if they undertake an M&A or strategic M&A in those markets to improve their overall service. Yeah, sure. Lots of reasons to be looking at Playtech in the coming future. So we will definitely do that at SBC News. We're going to cover any new developments that the company announces. So keep an eye out for that. We're going to put all the links that we've discussed today, all the links to the stories from today in the description. And this was me, Victor Kajas and Ted. Thanks for joining me. And yeah, stay tuned for the next episode of iGaming Daily.