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Software Provider Playtech in the News

By: Mark Freedman, Tuesday May 17th 2011
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It has been reported that online gaming operator William Hill PLC and online casino software provider Playtech Limited have reached an amicable settlement in their recent dispute. The dispute was over online casino William Hill Online, which is jointly owned by both parties. The genesis of the dispute was the market rumor that Playtech was negotiating a deal with Ladbrokes, which is the head on rival to William Hill. This led William Hill to secure a court injunction in February 2011 that would protect its interests in William Hill Online and prevent Playtech from taking any unilateral action that would violate the joint venture agreements.

Recently both Playtech and William Hill released their financial results and it was apparent how much William Hill Online contributed to the financial well being of both companies. Therefore it comes as no surprise that a mutually acceptable resolution has been finalized. As a result of the settlement, both Playtech and William Hill will apply for the injunction to be discharged. The new terms also contain an exit provision of the existing shareholders agreement including William Hill's call option rights exercisable in early 2013 and 2015. Both companies will now have greater flexibility in their respective operations. The joint venture William Hill Online will also be allowed greater flexibility. It will be allowed to provide betting services and will no longer be constrained to license its software exclusively from Playtech.

The second news item concerning Playtech is about a possible online gaming software supply deal with Gala Coral. This was reported in both the Israeli and the United Kingdom press. Gala Coral is a multi online gaming product British company and wants to use Playtech software for its online bingo, sports betting and online casinos. According to sources within Gala Coral the relationship will be one of supplier-customer rather than an acquisition initiative. Pursuant to the settlement reached with William Hill, Playtech can now enter into software provision agreements with other online gaming operators in the normal run of business.

If the deal goes through there would be repercussions for the Gala Coral administration according to a report in the Daily Mail. There could be job cuts, especially in the IT department. As it is Gala Coral is reorganizing into largely autonomous divisions. There has been speculation in the online gaming industry that this move is a prelude to hiving off some divisions when the market improves. This speculation has a basis in the recent refinancing undertaken by Gala Coral of its £2 billion debt burden.

These news items clearly indicate that the days of exclusive arrangements are over. Both suppliers of online gaming services and online gaming operators who utilize these services want to keep all market options open.

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