Ladbrokes is “no longer planning for migration from Microgaming until our contract ends in 2014”, CFO Ian Bull has admitted, hinting at possible further delays to the implementation of its Playtech-powered online turnaround strategy.
CEO Richard Glynn followed up Bull’s admission in this morning’s earnings call by informing analysts that “dual running” on Microgaming and Playtech platforms had “materially hit the casino” during a dire Q3 which prompted the bookie to bring forward its interim management statement to issue a profit warning for its digital business.
On the bookmaker’s failure thus far to secure an early exit from the Microgaming contract, Glynn added: “Obviously, I am not going to tell you the tenor of the negotiations. There are multiple factors at work. One is the amount they would accept for early release. The second one is their fear, real fear, of helping their biggest rival, irrespective of the fact they could make money for it. Third, there’s a history of competition between Playtech and Microgaming which doesn’t assist us in these negotiations.”
Glynn however emphasised that Ladbrokes continued to talk to Microgaming on a weekly basis, “to see if we can resolve this and move to a primary supplier.”
While declining to reveal exactly when Lads’ deal with Microgaming was due to expire - “We have never ever disclosed the terms of the contract and we are not entitled to” - he emphasised they remained “on track to complete fully the integration process in early 2014″, with migration to Playtech’s IMS back office for sportsbook taking place in Q1 and for gaming “in Q2 latest once we migrate to a principal primary supplier.”
Lads today warned the markets that 2013 digital profit would now be below expectations, coming in between £10m and £14m. The bookie blamed underperformance from the sportsbook and the effects of the Playtech integration.
“We underestimated the impact some of the changes would have on the business”, admitted Glynn, citing the transition to “the highly competitive Mobenga mobile platform”, having “to adapt to having dual suppliers in certain areas of the digital business” and “having until recently more than 200 people working under consultation.”
Glynn explained: “We have over 220 people on notice. We planned for this. Obviously we treat them very fairly. Most of them still work within the buiness during the consultation period. We hadn’t planned for this but the level of disruption and the impact it has had on the focus people have brought to bear on things has been greater than we believed.”
Article written by Stephen Carter
