Playtech, a prominent gambling software firm, finds itself embroiled in a financial dispute with its largest client, Mexican gambling platform Caliplay. 

Playtech Battles €122 Million Payment Dispute with Caliplay

According to Playtech, Caliplay has declined to settle its dues, amounting to a staggering €122 million ($131 million) in fees accumulated between 2023 and 2024.

The refusal to pay comes amidst a protracted legal battle between the two entities. Caliplay has sought to terminate its contractual obligations with Playtech, sparking a contentious legal tussle that has yet to reach a resolution. Despite the mounting financial strain, Playtech remains optimistic about recovering the outstanding funds through legal recourse, reported The Evening Standard.

The repercussions of Caliplay’s non-payment have reverberated through Playtech’s financial statements. Notably, the company reported a significant surge in profits for the fiscal year 2023, reaching €235.8 million ($253 million). This substantial increase in profits includes the unreceived fees from Caliplay, reflecting Playtech’s confidence in eventual reimbursement.

The company disclosed a revenue figure of €1.7 billion ($1.84 billion), reflecting a year-on-year growth of 7%. Conversely, EBITDA reached €406.5 million ($440.3 million), marking a 12% increase.

Mor Weizer, the CEO of Playtech, conveyed his unwavering confidence in the company’s resilience amid the ongoing challenges, stating that they remained confident in their ability to execute their strategy and to continue delivering value for their shareholders.

Playtech Faces Uncertain Future Amid Takeover Rumors and Legal Challenges

The situation has also fueled speculations surrounding Playtech’s future, with the company becoming a focal point of takeover discussions. Both its depressed share price relative to earnings and recent acquisition attempts on other industry players have intensified the speculation. 

Weizer hinted at Playtech’s active involvement in potential acquisitions, emphasizing the company’s robust financial position with a substantial cash reserve.

However, industry analysts caution against overlooking the potential ramifications of the Caliplay dispute. Neil Shah, director of research at Edison Group, highlighted the significance of the impending trial in October, suggesting that an unfavorable outcome could inflict substantial financial losses on Playtech.

Despite the looming uncertainty, market sentiments remain somewhat buoyant, with Playtech shares experiencing a marginal uptick in recent trading sessions. Analysts at Jefferies remarked on the market’s apparent pessimism, underscoring the likelihood of a negotiated settlement and the importance of maintaining a constructive relationship with Caliplay.

As Playtech braces for the legal showdown in the coming months, the outcome of the dispute with Caliplay will undoubtedly shape the company’s financial trajectory and market standing in the foreseeable future.

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Caliplay, the Mexican online casino and sports betting brand, has announced it launched legal action against Playtech, the global gaming giant, as it seeks to cancel a partnership between the two companies.

The legal action was filed by Caliplay in the 46th Civil Court of Mexico City and it was brought against Playtech and also its Playtech Software and Playtech Malta subsidiaries. Caliplay was formed as a joint venture between Caliente, the Mexican operator, and Playtech.

Now Caliplay wants to break off its legal relationship with Playtech because the Mexican company says that it has a negative impact on the running of its regulated online casino and sports betting business.

The Mexican Court has already issued several interim orders until the final resolution of the case, including the suspension of some of the rights Playtech held under the agreements with Caliente.

Until the claim is resolved, Playtech must continue to provide software and services to Caliplay. However, the supplier will no longer receive payment from the Mexican operator for its services.

Caliplay released a statement in which it expressed its desire to have the matter resolved as quickly as possible. Moreover, the Mexican operator underlined that it “is committed to maintaining a channel of communication with Playtech through which any disputes can be discussed and resolved.”

A Highly Valued Customer

Playtech did not respond negatively to the news from Mexico, at least not yet. On the contrary, the global gaming supplier described Caliplay as “a highly valued customer” and added that their contractual relationship has been “extremely productive for both parties.”

The company also noted that it has only become aware of the legal proceedings from Caliplay’s announcement and not from the Mexican Court. “Playtech has not yet had access to the court filings in Mexico,” a company statement read. “To the best of its knowledge, it has not yet been served with any proceedings. Playtech is therefore only aware of the matters in Caliplay’s announcement.”

However, the matter has its origins in February, when Playtech tried to obtain clarification from English courts on a disagreement with Caliplay. The case in question referred to whether the latter still held an option to redeem an additional services fee element of the strategic agreement.

The fee amounted to 34.4 million euro for the first six months of 2022 and Playtech said the option is stated as being exercisable for a period of 45 days following the approval of the audited accounts. In Playtech’s view, the option had expired but the operator disagreed.

Source: “Caliplay launches legal action against Playtech in Mexico“. iGaming Business. October 5, 2023.

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The conflict between Caliplay and Playtech continues, as the former party undertook legal action in an effort to cancel its relationship with the supplier.

A joint venture of Playtech and Caliente, a Mexican gambling company, Caliplay is actively trying to cut its ties to Playtech, which continues to affect its business.

The development follows earlier legal orders that forced Playtech to continue providing software and services to Caliplay while canceling some of the supplier’s rights. As a result, Playtech had to continue its work with Caliplay while being unable to receive payments for its services.

In any case, Caliplay hopes to resolve the matter quickly. It promised to keep on working with Playtech on resolving the dispute.

Playtech Was Unaware of the Proceedings

Playtech eventually commented on the development, saying that it had previously been unaware of the legal proceedings in Mexico.

Whilst Caliplay has stated that the Mexican courts accepted jurisdiction on 28 August 2023, Playtech only became aware of the issuance of proceedings today.
Playtech statement

The company described its past relationship with Caliplay as “extremely productive for both parties” and called Caliplay a “highly valued customer.” Playtech added that it still lacks access to the court filings and has not been served with any proceedings yet.

Playtech concluded that it will review the matter once it secures access to the court filings and will provide an update to its shareholders if needed.

For reference, the original point of disagreement between the two companies refers to whether Caliplay still has the option to redeem the extra service fee as part of the strategic deal that the two companies had signed in 2014.

Other Playtech News

In other news, Playtech just unveiled a partnership agreement with Adjarabet, agreeing to supply the operator’s business in Georgia and Armenia with content. The launch in these markets highlighted the provider’s interest in supporting emerging markets and engaging an international audience of fans with content.

A few days ago, Playtech also strengthened its relationship with Buzz Bingo, extending it until 2031. The deal underscored the two companies’ commitment to offering players innovative and seamless gaming experiences.

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