Playtech shares fell by 23% yesterday when the online gambling software design company announced to investors it would have a €70 million shortfall in its Asian properties this year. Playtech reported that its investment in China was the major cause of the shortfall.

In its report to investors, Playtech said that Asia had “seen a particularly aggressive pricing environment from new entrants to the market and this has impacted revenue”.

As recently as this spring, Playtech executives had voiced optimism about security FTSE 100 status in the United Kingdom. Tuesday’s selloff ends any hope of FSTE 100 status any time soon.

While discussing its issues, Playtech predicted that the period from finacial reports from June 30 to August 23 would have good news, mainly from the 2018 World Cup. Playtech said it “believes the increased activity due to the Fifa World Cup and general strength in the Italian gaming market is encouraging for the current period.”

Playtech Blames “Increasingly Competitive Environment”

Mor Weizer, Playtech’s CEO, said in a statement, “Clearly the recent trading performance in Asia is disappointing. We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.”

The Playtech financial report suggested that the company had to spend capital to support regional partners, who were involved in a price war with other competitors. European companies competing in the Asian market have to adjust for the costs and pricing in a different region with much different median incomes.

About Playtech

Playtech is a provider of online gaming software to many of the world’s leading Internet gaming operators: Ladbrokes, William Hill, Paddy Power, Bet365, Mr Green, Unibet, Betsafe, Gala, Coral, Betfair, PokerStars Italy, BoyleSport, Grosvenor, and Casino.com. With a 1994 launch, Playtech has a rightful claim to have been the first online gambling software developers.

The Isle of Man-based company’s expansion into Asia has been fraught with difficulties. The China debacle is the second time in 8 months that Playtech has met a setback in the Asian market.

Playtech’s Asian Woes

In November 2017, a crackdown on online gambling by Malaysian police led to a major decline in Playtech stock prices. In the months since, issues with a key licensee in China have led to further difficulties.

It was a Chinese price war which caused much of the €70 million shortfall. At first, stock was down 29%, though the bounceback meant that Playtech shares were down 23% on the day. Still, that is a huge selloff and a disaster for any company.

The company’s statement on its upcoming quarterly report said, “If the current run rate in Asia continues unchanged for the remainder of 2018, including no material improvement in Malaysia, Playtech’s expected revenue from Asia will be circa €70m lower than original expectations.”

Mor Weizer Statement

In a further statement to address the situation, Playtech CEO Mor Weizer said, “In line with our stated strategy, progress in fast-growing, regulated and soon to-be-regulated markets continues apace. Momentum in key regulated markets continued in the first part of 2018 with new agreements with Gala Leisure in the UK, SAS in Portugal and Totalizator, the Polish national lottery.”

“Additionally, regulatory developments in the US represent a significant opportunity for the group. The organic growth reported in the non-Asian B2B gaming business combined with the recent acquisition of Snaitech in Italy provides management with confidence that this strategy will materially improve the quality and diversification of Playtech’s performance in 2018 and beyond.”

About the Author
April Bergman avatar
April Bergman

April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

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April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

READ MORE
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