Playtech Beefs with Caliplay Regarding Fees to be Paid Within Playtech’s Joint Venture with Mexico’s Caliente
Published February 15, 2023 by Lee R
Hispanic customers in the US may have to wait longer for a Playtech-Caliente venture that would have specialised content.
Playtech is trying to sort out a point of contention with Mexican operator Caliente regarding the Caliplay joint venture the two operators are embarking on.
The Beef
Escalated by Playtech to the English courts, the dispute revolves around the question of whether Caliplay retains the option to redeem the additional services fee element of the joint agreement between Caliplay and Playtech.
Original Arbitration
The disputed option calls for a determination of Caliplay to pay Playtech by an independent investment bank, acting as arbiter to value Playtech’s entitlement to receive additional service fees until 31 December 2034.
Disputed Service Fees
The service fee for the six months through 30 June 2022 payable to Playtech was determined to be €34.4m (£30.8m/$37.1m), and €22.3m for the same period in the previous year, based upon Playtech’s claim that the business has continued to perform strongly in those terms.
Window Closed
Playtech finds fault with the conclusion of a 45-day window in which Playtech has not received its fee. The window was established for a term of 45 days following the approval of Caliplay’s audited accounts for the year ending 31 December 2021,
Playtech: Option Unpaid
Playtech now claims that the option has expired, as indicated in its interim report for the six months ending June 30, 2022, and published September 2022.
Escalation
While Caliplay has not sought to exercise the option and pay the fee, Caliplay’s assertion that the option has not expired has spurred Playtech to bring the matter to the courts.
Playtech Attempts to Respond
Playtech has commented on the matter by calling Caliplay “a highly valued customer and partner” who have proven “a highly successful and rapidly growing business,” promising further updates regarding clarifications from the English courts.
Original Plan
The friction with Caliplay dates to last year when Playtech scuttled plans to spin off Caliplay into a special-purpose acquisition company (SPAC), which would have brought Caliplay public. The SPAC was also slated to partner with a leading media business in an arrangement designed to reach Latin American customers in the US market.
Snag
Playtech subsequently deferred in July 2022 as a result of subsequent capital market conditions deteriorating “significantly.”
Mission Intact?
However, Playtech asserted it continued to work on reaching out to Hispanic customers in the US with a business leveraging the brand of Mexico market leader Caliente.
Outlook
This deal may now be stalling due to the rising controversy regarding rights fees. It remains to be seen what the English courts decree, and if both parties will be amenable to righting the ship.
