Playtech has made its first public statement on recent changes to its iPoker network, which will see certain tables restricted to its largest licensees from 1 September.
Poker revenues for the main gaming software supplier to bet365, Paddy Power and William Hill fell 12% year-on-year to €4.38m in the second quarter, down 18% on the preceding period, and were even outstripped by the contribution from bingo, which rose an impressive 21% year-on-year and 1% quarter-on-quarter to €4.41m.
Playtech CFO David Mathewson blamed “a continuing decline in the poker market” in the company’s Q2 analysts’ call, and confirmed it had “responded by making strategic changes to increase the liquidity of licensees on iPoker’s network”. The world’s largest poker network informed its existing licensees in June they they would need to hit new active player targets to retain full access to the iPoker player pool from September.
CEO Mor Weizer (pictured) explained: “We have put very strict rules [in place] in order to ensure we maximise the marketing effort by the licensees. This will create and develop an appetite by certain operators to further invest into their poker business.”
While Weizer admitted that “poker remains challenging across markets in Europe and across the industry”, he hoped implementing these changes “would start with slowing down the decline, but obviously longer term, definitely grow it back.”
He said: “The fact we are a B2B supplier and the world’s largest poker network, the balance we are creating within the network will allow us to become more attractive to other operators who are not on our iPoker network, which may start considering, may consider or are considering, moving across to Playtech.
“So not only do we have an opportunity with our existing licensees, developing and marketing the poker product, and have more incentive to do that, I think that Playtech will be very proactive in trying to attract more operators from other networks, and I hope this will come to fruition in the coming future.”
Poker was the one negative for Playtech as a strong casino performance and contribution from the PTTS business acquired from founder Teddy Sagi last July boosted revenue by 99% in the last quarter.
Revenue from licensees of Playtech’s core casino products – including bet365, William Hill and Paddy Power – was up 36% year-on-year to €37.1m. Casino also bucked the traditional summer slowdown by being 8% ahead of the previous quarter’s figure.
Weizer also commented on the “current status of discussions” with William Hill regarding the latter’s first call option to buy out Playtech’s 29% share in the William Hill Online joint venture which comes up in October, saying they were taking place “against the backdrop of an extremely strong financial performance at William Hill Online”.
Perhaps hinting at several analysts’ valuation of Playtech’s stake in the JV at in excess of £350m following William Hill Online’s increasingly stellar performance, Weizer said that the JV had “ensured they [William Hill] have one of the largest marketing investments compared to many other operators, both within the UK and outside of the UK, thus not only supporting their growth going forward, but further strengthening their market-leading position in the UK and other markets.”
Playtech spent US$250m (c£144.5m) in late 2008 on acquiring businesses from founder and main shareholder Teddy Sagi (Six-Digits Trading and Uniplay) that it then transferred to William Hill for its share in the online business, with William Hill’s gaming, poker and bingo products being migrated onto Playtech platforms.