Playtech, a global leader in the gambling technology space, has recently announced a major strategic agreement with Caliplay, a subsidiary of Caliente, that marks a pivotal moment in both companies’ growth. The amended terms of the partnership will see Playtech holding a 30.8% equity stake in Cali Interactive, the new holding company being formed for the Caliplay Group. This new company will be incorporated in the United States, offering significant expansion opportunities for Playtech and its partners.
Playtech Announces New Strategic Agreement with Caliplay
This announcement signals a deepened partnership, reinforcing Playtech’s role in the rapidly evolving online gaming and betting market, particularly within the Americas. Below, we explore the critical components of this agreement, its implications for both Playtech and Caliplay, and how this deal positions both companies for future success.
Playtech’s 30.8% Equity Stake in Cali Interactive
One of the most notable components of this strategic agreement is Playtech’s 30.8% equity stake in Cali Interactive, which will serve as the new holding company for Caliplay’s operations. The establishment of Cali Interactive will provide Playtech with increased exposure to the US gaming market, which is one of the largest and most lucrative markets globally.
By securing this significant ownership position, Playtech will be able to exert influence over the direction of Cali Interactive while benefiting directly from its growth. This equity stake gives Playtech not only financial gains but also a strategic foothold in the North American market. This move comes at a time when US states are increasingly legalizing and regulating online sports betting and iGaming, opening vast growth opportunities.
Board Representation and Dividends for Playtech
In addition to its equity stake, Playtech will have the right to appoint a director to Cali Interactive’s board. This crucial element of the agreement ensures that Playtech maintains an active role in shaping the company’s strategic decisions and overall governance. Board representation provides Playtech with a voice in the long-term planning of the company, as well as in key operational and financial matters.
Alongside its participation on the board, Playtech will also receive dividends in proportion to its equity stake. These dividends will align Playtech’s financial interests with those of other shareholders, creating a shared incentive for the company’s continued success. The ability to receive dividends further solidifies Playtech’s role as a key partner in Cali Interactive’s ongoing growth.
Extension of the B2B Software License and Services Agreement
Another critical aspect of the agreement involves the extension of Playtech’s business-to-business (B2B) software license and services agreement with Caliplay for an additional eight years. This extension reaffirms Caliplay’s confidence in Playtech’s industry-leading technology solutions and its ability to support its continued expansion.
In exchange for this extended partnership, Cali Interactive has committed to paying Playtech an additional $140 million in cash, which will be phased out over four years. This financial commitment underscores the importance of Playtech’s technology to Caliplay’s operations and highlights the long-term value of their collaboration. Playtech’s software and services have been instrumental in driving Caliplay’s growth in Mexico and other markets, and this extended agreement ensures that both companies can continue to capitalize on their combined strengths.
Recovery of Unpaid Fees
In addition to the expanded partnership terms, Playtech has also reported that it has successfully recovered more than €150 million ($166 million) in unpaid fees from Caliplay. This significant recovery represents over 80% of the total outstanding amount owed by Caliplay and strengthens Playtech’s financial position.
The remaining balance is being held in escrow and is expected to be released by the end of 2025 or once the revised terms of the agreement have been fully implemented, pending approval from Mexican antitrust regulators. This development reflects both companies’ commitment to resolving any outstanding financial issues and moving forward with their partnership on solid ground.
Mexican Antitrust Approval and Legal Proceedings
A key factor in the successful implementation of this revised agreement is the need for approval from Mexican antitrust authorities. This approval is expected to be granted by the first quarter of 2025. Once approved, the revised terms will take full effect, enabling Playtech and Caliplay to fully realize the benefits of their expanded partnership.
In the meantime, all ongoing legal proceedings between Playtech, Caliplay, and Caliente have been paused. The parties have reached an understanding to dismiss these legal cases once the revised arrangements are in place. This resolution clears the path for a more collaborative and productive relationship moving forward, free from the distractions and uncertainties of litigation.
Playtech’s Strong Financial Performance and Future Outlook
In a trading update that accompanied the announcement of the new strategic agreement, Playtech reported strong financial results, particularly in its B2B division. The company highlighted robust growth in the Americas, a region that has been a key driver of its recent success. As a result of this strong performance, Playtech now expects its 2024 Adjusted EBITDA to come in slightly ahead of market expectations.
The success of Playtech’s B2B operations is particularly notable in the context of its partnership with Caliplay. This partnership has been a major contributor to Playtech’s success in Latin America and has positioned the company to capitalize on further opportunities in the region. The extended B2B agreement and Playtech’s stake in Cali Interactive further enhance the company’s ability to drive future growth in both North America and Latin America.
CEO Mor Weizer’s Optimism for the Future
Mor Weizer, CEO of Playtech, expressed his optimism about the revised agreement and its potential for future growth. In a statement, he emphasized that the revised arrangements mark the beginning of an exciting new chapter for both Playtech and Caliplay. He noted that the new equity structure and extended B2B agreement would serve as a foundation for significant future growth for Cali Interactive.
Weizer’s comments reflect Playtech’s confidence in its ability to continue driving growth through strategic partnerships and its cutting-edge technology solutions. As the company continues to expand its presence in key markets, particularly in the Americas, the revised agreement with Caliplay represents a crucial component of Playtech’s broader growth strategy.
Conclusion: A Stronger Partnership for Future Growth
The revised strategic agreement between Playtech and Caliplay represents a significant milestone for both companies. With Playtech securing a 30.8% equity stake in Cali Interactive, extending its B2B software license for another eight years, and recovering over €150 million in unpaid fees, this deal positions both companies for continued success in the growing iGaming and sports betting markets.
As US and Latin American markets continue to evolve and expand, the Playtech-Caliplay partnership is poised to drive substantial growth for both companies. With Mexican antitrust approval expected in early 2025, Playtech and Caliplay are well-positioned to unlock even greater opportunities in the years to come.
FAQs About Playtech’s Strategic Agreement with Caliplay
1. What is the significance of Playtech’s new strategic agreement with Caliplay?
The new strategic agreement between Playtech and Caliplay marks a significant step in their partnership, as Playtech will now hold a 30.8% equity stake in Cali Interactive, the new holding company for the Caliplay Group. This provides Playtech with greater influence and access to the US gaming market, which is one of the most lucrative markets globally.
2. What is Cali Interactive?
Cali Interactive is the new holding company for the Caliplay Group that will be incorporated in the United States as part of the new strategic agreement between Playtech and Caliplay. The creation of this entity positions both companies for growth in the expanding US gaming and iGaming markets.
3. What role will Playtech play in Cali Interactive’s management?
Under the terms of the agreement, Playtech will have the right to appoint a director to Cali Interactive’s board. This allows Playtech to play an active role in the strategic decisions and governance of the company, further aligning its interests with the success of Cali Interactive.
4. How long has Playtech extended its B2B software license and services agreement with Caliplay?
Playtech has extended its B2B software license and services agreement with Caliplay for another eight years, reaffirming its collaboration in providing technology solutions to support Caliplay’s growth.
5. How much will Cali Interactive pay Playtech under the new agreement?
Under the new terms, Cali Interactive will pay Playtech an additional $140 million in cash, which will be phased over four years. This payment is in exchange for the extended B2B agreement and Playtech’s ongoing support through its software and services.
6. Has Playtech recovered unpaid fees from Caliplay?
Yes, Playtech has reported that it has successfully recovered more than €150 million ($166 million) in unpaid fees from Caliplay. The remaining balance is being held in escrow and is expected to be released by the end of 2025, or once the revised terms have been fully implemented.
7. What is the status of the legal proceedings between Playtech, Caliplay, and Caliente?
All ongoing legal proceedings between Playtech, Caliplay, and Caliente have been paused. Once the revised arrangements take effect, these cases will be dismissed, ensuring a smoother and more collaborative future for both parties.
8. When is Mexican antitrust approval expected for this agreement?
Approval from Mexican antitrust authorities is anticipated by the first quarter of 2025. This approval is required to finalize the revised terms of the agreement between Playtech and Caliplay.
9. How has Playtech’s B2B division performed in 2024?
Playtech has reported strong financial performance in its B2B division, especially in the Americas during the first half of 2024. The company expects its 2024 Adjusted EBITDA to exceed market consensus, driven by its successful partnerships, including with Caliplay.
10. What are Mor Weizer’s comments on the revised agreement?
Mor Weizer, CEO of Playtech, described the revised arrangements as the beginning of an exciting new chapter for both companies. He emphasized the potential for significant future growth for Cali Interactive, building on the progress they have already made together.
