Playtech takes £10m Sportech stake to fund Sportech's SGR buy

PLAYTECH HAS bought a £10m stake in UK pools business Sportech that will enable Sportech to buy a subsidiary of Playtech’s new business partner, Scientific Games, ahead of a further deal in which Scientific will take a 20% stake in Sportech.

Software business Playtech has agreed to subscribe for 19.9 million ordinary shares of 50p each in Sportech, which is the UK’s biggest pari-mutuel football gaming business and the owner of The New Football Pools, representing just under 10% of Sportech’s enlarged issued share capital.

This deal is part of a £29.2m capital raising by Sportech to fund its acquisition of Scientific Games Racing (‘SGR’), the US-based pari-mutuel and venue management business division of Scientific Games Corporation, with which Playtech last week formed Sciplay, a joint venture to target the international ‘B2G’ market of government-backed lottery providers.

The intended acquisition of SGR, for up to $83m (€58.9m, £51.5m), was announced by Sportech today, and is an attempt by Sportech to broaden its core football pools business with SGR’s horseracing gaming operation, which spans a range of international jurisdictions. Scientific Games will then take a 19.9% stake in Sportech when the acquisition has taken place.

Playtech chief executive Mor Weizer said: “This is a further significant alliance for Playtech in the growing international regulated gaming arena. Through its acquisition of SGR, Sportech has strengthened its already leading position in regulated pari-mutuel markets by adding horseracing to football ““ two of the most popular gaming sports in the world. We share many of Sportech’s goals in growing our business in regulated markets and look forward to helping the company fulfil its great potential.”

The Playtech-Sportech deal will also see Playtech provide egaming software and services to both the Sportech and SGR businesses, and seek to distribute Sportech’s core football pools product to other clients.

However Sportech chief executive Ian Penrose denied that the software supply deal with Playtech threatens Sportech’s relationship with existing software supplier Dragonfish, 888’s business-to-business (B2B) arm. Penrose said: “We have bingo provided by G2, bingo and soft games provided by Virtue Fusion – we have lots of providers.”

Under the terms of the deal, Playtech has the right to nominate one non-executive director to Sportech board, and a further announcement on this will follow, the companies said.

In other company news this month Sportech launched in India via a joint venture with Playwin, the Indian gaming operator and signed a deal with the Daily Mirror to feature pools in the UK newspaper. Playtech released 2009 figures yesterday showing moderate revenue growth but an increase of almost a quarter in gross income from the joint venture with William Hill Online formed in 2008.